UPDATE: BMO Capital Markets Downgrades Tim Hortons to Market Perform, Lowers PT

BMO Capital Markets Downgraded Tim Hortons Inc.

from Outperform to Market Perform, and reduced price target from $59 to $53. BMO Capital Markets noted, "the recovery that we were anticipating in SSS from the depressed level of Q2/12 did not materialize, with continued declining traffic in Q3/12. Also, management indicated that there would not be any significant inflation in food commodity costs and menu board price increases were not expected in the near term. Overall, SSS in Canada has now clearly decelerated and it is unclear whether the slowdown was due to economic stress on the consumer, heightened competition, or possibly capacity constraints. It was likely some combination of all three. While the company has a number of new menu items and other initiatives (double-lane drive through), we do not see these projects being capable of meaningfully reaccelerating SSS over the next number of quarters. We are downgrading Tim Hortons to Market Perform from Outperform. Our target price is revised to $53 from $59, which is based on a projected Enterprise Value that is 10.5x (from 11.5x) our revised 2013 EBITDA estimate." Tim Hortons closed at $47.03 on Thursday.