Tim Hortons (THI) shares were down in the morning trading session at the New York Stock Exchange (NYSE) and Toronto Stock Exchange (TSE) as the investment firm Goldman Sachs downgraded the Canadian coffee giant from “neutral” rating to “sell” rating, according to a press release
The downgrade was put forth as the New York-based investment banking company had concerns over modest same-store sales, which have remained steady for quite some time now, and a drop in restaurant traffic.
In a note to investors, Goldman Sachs analyst Michael Kelter warned that this may be a sign of saturation in the competitive food and beverage market – Tim Hortons has been attempting to create a presence in the food market, while McDonald’s has been trying to get a foot in the coffee market.
“These declines may be an early indicator of impending saturation in its home Canadian market and/or may reflect increased competitive pressures,” wrote Kelter, reports Reuters
(via the Toronto Sun
). “If traffic trends rebounds to a sustained positive trajectory, we would reevaluate our view.”
Shares were down $1.27 or 2.37 percent to $52.41 at the TSE
, while Tim Hortons’s shares were down $1.28 or 2.42 percent to $51.61 at the NYSE
The downgrade comes as the company announced
that it will offer free Wi-Fi at 90 percent of its franchises in Canada by September. For non-registered Tim Hortons Wi-Fi users, it offers two hours of free service. For registered, it is unlimited.
Tim Hortons maintains more than 4,000 restaurants, including 3,315 in Canada, six in the Gulf Cooperation Council and 721 in the United States, with more than 100,000 employees. It reported
revenues nearly $3 billion last year.