Beyond Meat tumbles after lead underwriter downgrades stock
The alternative meat company falls 22% after a JP Morgan analyst cuts the stock rating
Bengaluru — Shares of Beyond Meat fell as much as 22% on Tuesday after one of the stock's lead underwriters, JP Morgan, downgraded it, saying the exponential growth expected from the plant-based burger was now priced in.
Beyond Meat has surged more than 69% in two days since it forecast overall sales in 2019 to more than double.
JP Morgan analyst Ken Goldman cut the stock rating to “neutral” from “overweight” and said it was “purely a valuation call”.
The stock, which has quadrupled in value since debut in May, is “beyond our price target”, he said.
Shares of the company were down 19.8% at $134.9 in mid-day trading, but still well above every Wall Street analysts’ price target on the stock. Goldman set the price target at $120.
Goldman had raised his price target for the second time in three days to $121, after raising it by $23 on Friday on the upbeat forecast.
Beyond Meat’s projections also prompted at least three brokerages to raise their price targets.
Goldman wrote that “at some point, the extraordinary revenue and profit potential embedded in Beyond Meat … will be priced in”.
“We think this day has arrived,” his latest note said.
Separately, Beyond Meat said on Tuesday it would start selling a new version of its flagship vegan burgers, which look and cook more like traditional beef, as it battles for space in the meat section of US grocery stores.
The launch of its meatier burger comes as it prepares to compete against new launches from Nestlé, Tyson Foods and Impossible Foods.
The new burgers imitate the marbling effect, or the streaks of fat, seen in red meat. The California-based company has focused on getting more meat eaters to pick up its products, saying they are more sustainable and better for the environment.
The new burgers are made with blended pea, mung bean and rice proteins that give a more fibrous texture, compared with the company's previous recipe which included pea protein, coconut and canola oil.