D.A. Davidson analyst Bart Glenn upgraded Dunkin’ Brands (DNKN) and Starbucks (SBUX) today.
He raised his rating on Dunkin’ to Neutral from Underperform, arguing that the stock’s recent slide has made it more fairly valued. Glenn expects comparable store sales to increase at a pace greater than 4% in the fourth quarter, and end in 2012 and 2013. He also doesn’t think Green Mountain Coffee Roasters’ (GMCR) K-cups have cannibalized coffee sales since Dunkin’ started offering its coffee in the cups.
As for Starbucks, Glenn raised his rating to Buy from Neutral and sees the company as one of the best large cap consumer growth companies out there.
“Given the scarcity of large cap consumer growth companies, we anticipate the valuation will continue to expand. Other leading large cap consumer stocks trade at relatively similar 2013 valuationsdespite offering much less attractive growth profiles. We believe Starbucks offers compelling global growth and the business is more defensive than some investors appreciate.”
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