One of Beyond Meat's earliest bulls downgrades the stock, saying its soaring price bakes in 'plenty of potentially good news'

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  • JPMorgan was among the first to issue a "buy" rating for Beyond Meat shares after its May 2 IPO, but the bank now holds a "more balanced risk/reward outlook" on the stock.
  • Analyst Ken Goldman downgraded the plant-based-meat company to "neutral" from "overweight" in a Tuesday note, saying investors should "head for the sideline once again" after the shares posted massive gains in the year-to-date.
  • JPMorgan remains positive regarding Beyond Meat's future and sees the company reaching $2 billion in sales by 2020, according to the note.
  • Watch Beyond Meat trade live here.

JPMorgan issued a "buy"-equivalent rating for Beyond Meat about three weeks after its May 2 initial public offering, but the bank now holds a "more balanced risk/reward outlook" on the stock.

Analyst Ken Goldman downgraded Beyond Meat shares to "neutral" from "overweight" in a Tuesday note. A slew of positive news stories for the company drove its stock to outperform the S&P 500 by 65% in the year-to-date, but the bank now recommends investors "head for the sideline once again."Advertisement

"We continue to believe Street estimates for 2020-21 are too conservative, but with only 7% upside to our December 2020 price target, we no longer see a compelling valuation argument," Goldman wrote.

Goldman cut his 12-month price target for the plant-based-meat company to $134 per share from $138, implying a 7.4% gain from Monday's closing price.

Beyond Meat has enjoyed stock jumps from numerous stories in January, including the CEO of rival Impossible Foods saying his supply chain wasn't ready yet for a McDonald's partnership, McDonald's expanding its sale of Beyond Burgers in Canada, and Starbucks announcing it would add more plant-based items to its menu.
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The faux meat producer traded as much as 9% higher Monday after announcing an expanded partnership with Denny's. The restaurant chain will begin selling Beyond Burgers in 1,700 locations and give free burgers with drink purchases on January 30 to kick off the expansion.

Beyond Meat was among the few companies to notch major gains in Monday trading as the greater stock market tumbled on coronavirus fears. The stock "now bakes in plenty of potentially good news," and the bank's downgrade is "largely a valuation call," Goldman wrote. He added JPMorgan remains optimistic on Beyond Meat's growth prospects, and that Beyond Meat can be a global leader in the growing plant-based-meat sector with $2 billion in sales by 2020.Advertisement

JPMorgan's downgrade is unrelated to Monday stories about a legal conflict with a former Beyond Meat partner, according to the note. A judge ruled Beyond Meat breached a partnership with Don Lee Farms, and that Beyond Meat's chief financial officer Mark Nelson can be named in fraud claims. The ruling "reads poorly for BYND," Goldman said, but the bank does not yet know "how to handicap its impact at this time."

Beyond Meat closed at $124.75 per share on Monday, up roughly 68% year-to-date.

The company has two "buy" ratings, 11 "hold" ratings, and four "sell" ratings, with a consensus price target of $102.12, according to Bloomberg data.Advertisement

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