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JP Morgan downgrades Starbucks after 90% rally: 'Upside from here is limited'

Key Points
  • J.P. Morgan lowers its rating on shares of Starbucks to neutral from overweight.
  • "Price performance following F3Q19 results has exceeded our expectations," analyst John Ivankoe says.
Starbucks President and Chief Executive Officer Kevin Johnson is pictured at the Annual Meeting of Shareholders in Seattle, Washington on March 20, 2019.
Jason Redmond | AFP | Getty Images

J.P. Morgan lowered its rating on shares of Starbucks to neutral from overweight on Monday, telling investors further "upside from here is limited" now that the stock has climbed over 90% in the past 12 months.

"Price performance following F3Q19 results has exceeded our expectations," J.P. Morgan analyst John Ivankoe said.

The firm's move comes after Starbucks stock climbed over 9% after its fiscal third-quarter earnings report beat Wall Street's expectations on Thursday. The analyst pointed out that Starbucks stock pop was "its biggest one-day gain since November 2," and takes it "to levels well above even our $91 December 2020 price target."

"Valuation has become beyond a stretch," Ivankoe said. "Plus, being very late cycle often means continued rising labor costs matched with difficulties of generating sustained increases in same-store traffic."

Starbucks stock fell 1.1% in trading from its previous close of $99.11 a share. J.P. Morgan stuck to its $91 price target on Starbucks shares. The firm also removed Starbucks from its "Analyst Focus List."

– CNBC's Michael Bloom contributed to this report.