Citi cuts Starbucks target, says China spin would not unlock value

Citi lowered the firm’s price target on Starbucks to $100 from $104 and keeps a Neutral rating on the shares. The analyst does not see a China business spinoff as a significant unlock of value. The firm estimates China is only 6% of Starbucks’ EBIT. It is hard to move the needle with a small piece of the business, the analyst tells investors in a research note. Citi does not believe a standalone China business would be self-funding in its current state, “and that would have implications for how the business would need to be capitalized, which would impact valuation.” Its sum-of-the-parts analysis suggests Starbucks is fairly valued today.