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Things aren’t looking too hot for Starbucks Corp. Last month, the Seattle-based coffee giant posted a 28% drop in second-quarter profit as U.S. consumers struggled to cope with rising gas prices, food inflation, and continued turmoil in the housing market. Adding to its woes, Starbucks has faced increased competition in recent months from McDonald’s Corp, which is rolling out a line of premium coffee, including cappuccinos, mochas and lattes.

According to analysts at Deutsche Bank, its the latter that poses a serious material threat to Starbucks.

“Nobody can do it like McDonald’s can - gain coffee shares, that is,” analyst Marc Greenberg said in a client note. Attempting to quantify the risk from McDonald’s ongoing roll-out of premium coffee products, Greenberg estimates about 5 cents of further earnings-per-share downside for Starbucks.

“If we assume all McDonald’s stores receive the specialty coffee package over the next 12 months and sell just 35 units per day at $2.75 per unit, this would be a $490 million annual increase in coffee sales, and on an incremental basis, equivalent to 6% to 6.5% of Starbucks coffee sales,” Greenberg said. “If we push estimates for McDonald’s roll-out to the most aggressive levels, 125 units per day in all 14,000 stores, incremental sales would be $1.75 billion, equivalent to 22% to 23% of Starbucks coffee sales.”

Greenberg noted that McDonald’s growth in coffee is not a zero-sum game, so his percent estimates would not “flow through directly” to impact Starbucks profits. However, he said that he can conservatively model the impact by estimating that 25% of McDonald’s coffee growth comes from Starbucks sales.

Greenberg also acknowledged that there are some that regard the Starbucks customer and demographic as different than McDonald’s, but argued that the cheaper coffee prices and more outlets of McDonald’s offer a “very compelling” value proposition for the burger chain and “limited” growth opportunities for the coffee giant.

“With about 12,000 [Starbucks] stores versus 14,000 for McDonald’s, more drive-thru stores, competing offerings in coffee, speciality beverages, and, before long, smoothies and other drink types like energy, it seems inevitable that Starbucks will bump into McDonald’s with ever greater frequency.”

Summer is fast approaching and bathing suits are awakening from their winter hibernation, so for one Credit Suisse analyst now was the time to shed those unwanted pounds with a rigorous 30-day diet - of nothing but McDonald’s.

That’s right - Credit Suisse analyst Keith Siegner took a page out of Morgan Spurlock’s playbook and dared to take on Ronald in a month-long battle of wills in an effort to show that even without further development, fast food can be considered synonymous with health living.

“As one of the first industries subject to health-related scrutiny, we believe quick-service restaurants [QSRs] will ultimately benefit from earlier product innovation and will potentially gain share from less convenient but currently perceived healthier concepts while scrutiny migrates towards other categories and industries,” Seigner said of his experiment.

Among the QSRs that Credit Suisse feels will lead the movement, McDonald’s jumped out ahead of the pack with what Siegner calls “early-moving and trail-blazing” efforts, but the analyst is also looking to Burger King, KFC, and Taco Bell to use imminent new product launches and marketing campaigns to gain healthful product share in the near future.

With McDonald’s identified as Siegner’s leading candidate, he set out to exercise “proper” item selection and portion control to prove that fast-food outlets are well positioned to turn potential regulation and evolving consumer preferences into opportunities to drive “healthy” sales and profits. The results? Through consuming roughly 30 chicken sandwiches, 27 salads, and 14 burgers ( resulting in an April diet total of 52,020 calories, 1,534 grams of fat including 472 grams of saturated fat, 142.3 grams of sodium and 3,165 grams of protein), Seigner actually lost five pounds and lowered his LDL (bad) cholesterol by 36 points, while his HDL (good) cholesterol barely moved. His overall cholesterol fell by over 20%, his sodium level declined a touch, his blood pressure declined and his resting hear rate was only 50 beats per minute.

“I ate more fast food over the course of April than I had since maybe last summer, when I tasted every burger from all the QSRs as due diligence (including some twice),” Seigner said. “The point is; I didn’t totally deprive myself. I just exercised moderation when eating the less healthful options.”

Not only does Seigner see potential for the national fast-food chains to capitalize on the healthy-conscience consumer, but he also sees a “solid” opportunity for regional concepts with active product development programs, customer bases that would be responsive to healthful options and creative marketing to exploit such efforts, such as Jack in the Box, Sonic, and others.

Consumers did take notice in April. McDonald’s said Thursday that its global same-store sales for April rose 5% versus the year-ago period, and U.S. comparable-store sales increased 2%.

McDonald’s sure gave something for investors to smile about on Monday. The Golden Arches reported February same-store global sales rose a better-than-expected 11.7%, helped in part by the month’s extra selling day for the leap year. The fast-food chain said burgers and chicken sandwiches drove Europe comparable sales up 15.4% for the month, while the breakfast menu and premium roast coffee fueled a 8.3% increase in the U.S. Meanwhile, in Asia, the Middle East and Africa, same-store sales gained 10.9% for the month, while the leap year added about 4% to global sales.

“These results are very strong absolutely and far exceed our expectations,” Bear Stearns analyst Joseph Buckley said in a client note. Buckley had estimated February same-store sales would rise 5.7% on a worldwide basis, with the U.S. up 3.1%, Europe up 5.9% and Asia, the Middle East and Africa up 12.3%.

Buckley said the February sales report should be viewed “very favorably” on Wall Street with the combination of stronger U.S. performance after two slower months and the double digit European same-store sales gains. He raised his earnings estimates for the first-quarter of 2008 to 71 cents from 68 cents a share and for the full-year to $3.20 from $3.17 a share.

At Goldman Sachs, analyst Steven Kron said the U.S. February same-store sales result was the standout and should mitigate near-term concerns of macro pressures weighing on the business. “We continue to believe that McDonald’s is well-positioned to navigate through domestic economic challenges given its tiered menu platform which offers broadly appealing mix of every day value and premium new product news,” Kron said in a note.

Kron added that the fast-food purveyor’s continuing global strength should warrant a premium for those investors looking for international exposure beyond just currency gains. He raised his earnings estimates to 68 cents from 67 cents a share for the first quarter and to $3.18 from $3.17 a share for 2008.

The mean estimate of analysts polled by Thomson Financial is for first-quarter earnings of 67 cents a share and 2008 earnings of $3.18 a share.

McDonald’s, a Dow Industrial component, saw its stock rally 3.4%, or $1.80, to $54.07 in midday trading. Earlier, the stock hit session-high of $54.69.