DFI Retail’s Starbucks deal offers ‘earnings stability’ despite near-term hit: analysts
DBS lowers its target price for the retailer to S$4.50
Analysts maintain that DFI Retail Group's acquisition of the Starbucks licence will provide the company with greater "earnings stability" in the long run, despite a near-term earnings hit. DBS, one of the brokers covering the retailer, lowered its target price to US$4.50 from US$5, citing integration costs and the loss of Maxim's associate profit.
However, the broker maintained a "buy" rating, anticipating Starbucks revenue to offset the initial costs and bring in US$340 million in cash. CGS International and Citi kept their "add" calls on the stock, with CGSI maintaining a target price of US$5.50 and Citi viewing the transaction as the final step in DFI's transformation into a fully operational company.
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