Starbucks Corp. (NASDAQ: SBUX) has had a rather strong 2019 performance, with its shares up 16% or so year to date. Now there is a legitimate question over whether its shares are overvalued, after having reached an all-time high.

UBS downgraded Starbucks to Neutral from Buy in a valuation call, and the firm remained positive enough on the company’s fundamentals that even with a downgrade it raised the price target to $78 from $72.

Dennis Geiger, the UBS analyst leading the team behind the downgrade, said:

We expect Starbucks can generate 3% to 4% same-store sales in the U.S. over the next few years given contribution from digital, loyalty and personalization, food and beverage innovation, and several other sales layers.

The UBS price target hike was influenced also by the company’s recently announced $2 billion accelerated stock buyback plan. Upside to the company’s own fiscal 2020 earnings (per share) estimates were cited as well.

On top of a 55% gain since last summer, and the risk/reward now appearing to be more balanced, Geiger said:

Improved same-store-sales momentum and streamlined operations better position Starbucks going forward, but we believe shares reflect this and expectations are now elevated… Shares trade at roughly 25-times consensus Fiscal Year 2020 earnings per share, or the upper end of the 2-year range of 18X to 27X. Repurchase activity and upside to forecasts could support further multiple expansion, but we see risks from downside to more elevated sales/earnings expectations as an offset.

Valuation downgrades do not always cause the biggest drops compared with new developments in which analysts see trouble brewing. Starbucks recently hit an all-time high of $75.05, but the stock was last seen down 10 cents at $74.93. The Refinitiv consensus analyst target price was $69.80.

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