Tim Hortons' shares fall

Tim Hortons. (QMI Agency, file)

Tim Hortons. (QMI Agency, file)


, Last Updated: 11:12 AM ET

Shares of Tim Hortons Inc fell and Cheesecake Factory Inc rose on Monday after Goldman Sachs downgraded its rating on Tim Hortons to “sell” and upgraded Cheesecake Factory to “neutral.”

In a note to clients, analyst Michael Kelter said that despite steady same-store sales gains at Tim Hortons, he is concerned with declines in restaurant traffic at the chain, best known for its coffee and doughnuts.

“These declines may be an early indicator of impending saturation in its home Canadian market and/or may reflect increased competitive pressures,” he wrote.

Tim Hortons and U.S. heavyweight McDonald’s Corp are increasingly competing head-to-head in Canada, as Tims expands food offerings and McDonald’s promotes its coffee.

In the same note, Kelter upgraded Cheesecake Factory Inc to “neutral” from “sell.” He said the restaurant chain’s same-store sale trend has held up better than its peers, and that earnings may be boosted by lower food costs.

Tim Hortons’ stock was down 2.9% at $52.15 in early trading on the Toronto Stock Exchange on Monday. Cheesecake Factory rose 2.3% to $32.61 US on the Nasdaq.

(Reporting By Allison Martell)