BMO Capital Markets, a financial services firm, downgraded Starbucks (NASDAQ: SBUX) shares from outperform to market perform Wednesday after its research showed that there were too many Starbucks. There are, on average, over three Starbucks in a one-mile radius of every other Starbucks.

“Cannibalization likely has increased,” wrote BMO analyst Andrew Strelzik in the company’s analysis. “Strong new store performance appears to be coming — at least in part — at the expense of existing store traffic.”

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Starbucks opened 650 U.S. stores in the fiscal year 2016. BMO feels that the high number Starbucks locations in a given area are hurting each other’s sales. BMO’s analysis suggests that the pace of U.S. development should slow down.

“Seventy-five percent of Starbucks locations in California now have a store within a one-mile radius,” Strelzik told CNBC Wednesday. “There are now 3.6 Starbucks locations within a one-mile radius of the typical Starbucks in the U.S. relative to 3.3 and 3.2 stores in 2014 and 2012 respectively.”

California represents Starbucks’ largest market accounting for 20 percent of its U.S. stores. In New York, there is an average of 23.5 Starbucks within a one-mile radius of any given Starbucks.

Starbucks, however, said in an investor conference call in July that it feels that it isn’t facing cannibalization from oversaturation.

“We're able to track quite accurately the cannibalization results that happened from those new stores, and what we've seen over many years is very, very little impact of net new cannibalization of those new stores,” said Scott Harlan Maw, the company’s chief financial officer.

BMO research lowered its 12-month stock price target to $56 from $64. Starbuck shares fell 1.6 percent on Wednesday after the downgrade.

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“Starbucks continues to produce record financial and operating results quarter after quarter, and open a new class of over 2,000 stores around the world every year, that continue to outperform competitors and deliver industry-leading …profit, starting virtually from the day they open their doors,” Starbucks spokesperson Reggie Borges told Business Insider Wednesday. “Clearly we believe that there's still a long runway for growth for new stores in the U.S. and globally.”

Starbucks currently has 13,612 stores in the U.S. and Puerto Rico. The coffee chain had to close around 600 underperforming stores in 2008 after adding almost 10,000 U.S. stores that year.