Beyond Meat gets nailed with its lowest price target yet from firm worried about competition, stock valuation

Del Taco Beyond MeatHollis Johnson/Business Insider

  • Mikheil Omanadze of BNP Paribas Exane initiated coverage of Beyond Meat on Monday with a "sell" rating and a price target of $70.
  • That's the lowest price target on the street. It's also Beyond Meat's third bearish analyst view since its May IPO.
  • Shares fell as much as 6% on the news.
  • Omanadze cited the company's high valuation and low barriers to entry as reasons for his rating.
  • Watch Beyond Meat trade live on Markets Insider.

BNP Paribas Exane just joined a growing group of analysts that say to sell Beyond Meat.

Shares of the plant-based meat company slid as much as 6% Monday when analyst Mikheil Omanadze of BNP Paribas Exane initiated coverage of the company with an underperform rating and a price target of $70.

That's currently the lowest price target on the street. The second-lowest is from Erlan Abdikarimov of Freedom Finance who has a target price of $87.90 and has long been bearish on the stock. The stock carries an average price target of $148.43.

Omanadze said that the company's high valuation and low barriers to entry in the plant-based meat alternative industry are the main reasons for the rating.

"While plant-based meats will grow rapidly, we believe that barriers to entry are negligible; we thus struggle to justify BYND's valuation," he wrote.

He also noted that a number of other traditional food giants such as Nestle, Tyson, Kellogg and Hormel are all working on their own alternative products that will compete with Beyond Meat.

There's competition outside of the traditional food space as well, he said. Kroger has also launched its own line of plant-based meat alternative products, as has Lidl.

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He's also skeptical about Beyond Meat's future potential in food service. Restaurant and food partnerships have been a large driver for the company, and analysts have estimated that Beyond's stock price could soar 30% if it were to secure a partnership with McDonald's. But in the future, Omanadze writes that he thinks it is unlikely that branded burgers will ultimately have a material presence in food service.

"They do not do so in the animal world, so why in plant-based?" he wrote.

Omanadze joins a growing group of Beyond Meat bears. Brian Holland of D.A. Davidson also has an underweight rating on shares, but a higher price target of $130. Of the analysts that cover Beyond Meat, three have rated shares underperform, seven are neutral, and two say to buy, according to recent Bloomberg data.

Shares of Beyond Meat are up roughly 490% since the company's IPO in May.

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