Shares of Tim Hortons touch low after downgrade

Shares of Tim Hortons Inc. touched a 52-week low Friday morning after an analyst downgraded the coffee chain, saying few catalysts will likely emerge in the near term to boost the stock.

The stock slipped 81 cents, or 2.7 percent, to $28.84 after setting the $27.67 low earlier in the session.

Goldman Sachs analyst Steven T. Kron cut his rating on the Canadian company to "Sell" from "Neutral" and his price target to $30 from $34 late Thursday.

The new target implies he expects shares to rise about 1 percent over Thursday's $29.65 close.

"A more visible path to U.S. profitability needs to emerge to justify a premium multiple," Kron said in a note to clients. "We think this is unlikely to materialize near term."

While margin improvements may happen in the short term, rising costs for materials will likely make margins hard to sustain, he said.

The stock has dipped about 20 percent so far this year.

Spokeswoman Rachel Douglas said in a phone interview that Tim Hortons stands by its previously stated goals of 10 percent operating income growth for the year, and 2 percent to 4 percent U.S. same-store sales growth for the year.

Same-store sales, or sales at stores open at least a year, is a key indicator of retailer performance since it measures growth at existing stores rather than newly opened ones.