Starbucks (SBUX) is getting into the bread business. While the $100 million purchase of La Boulange Bakery in San Francisco is a relatively small deal for the king of coffee, I am a little surprised Panera (PNRA) investors aren't more worried about the implications of Starbucks setting its sights on baked goods.
Panera's shares were down as much as 3% Tuesday morning before rallying as the day progressed to near break-even status. But Panera seems like the type of company that would be ripe for a pullback on concerns about more competition. Shares trade at nearly 25 times 2012 earnings forecasts. That's ... uhh ... a lot of dough. (Sorry! Couldn't resist.)
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