The plant-based burger maker which has been the best performing U.S. initial public offering of the year sank more than 11% early Tuesday after analysts at JPMorgan downgraded the stock to "neutral" from "overweight".
The price for a share of Beyond Meat nearly tripled on the first day of trading in May, and that was just a taste of what was to come.
J.P. Morgan's Ken Goldman and James Allen downgraded the stock to "neutral" after a run that has cost short sellers, $400 million, according to the research firm S3.More news: Boeing 737 MAX to be flying again by December, says US Official
JP Morgan has an overweight rating with a $120 price target. The stock closed Monday at $168.10, or 6.7-times the $25 IPO price.
Also, there is always a risk that emerging stars in the business could be roiled by a recall, said JPMorgan. "As we wrote last week, "At some point, the extraordinary revenue and profit potential embedded in BYND... will be priced in" - we think this day has arrived".
Barclays says the "alternative meat" market could account for around 10 per cent of all global meat sales, or up to US$140 billion, in 10 years. Its meatless meat alternatives (burgers, ground meat) have found a following among meat eaters, who like the taste of meat but worry about its health and environmental consequences.More news: Outgoing British Prime Minister announces target for Net Zero emissions by 2050
Impossible Foods, whose Impossible Burger is sold in more than 7,000 restaurants in the United States and Asia, recently raised US$300 million in a financing round that valued the company at US$2 billion. Traditional players like Tyson Foods Inc are also entering the fray. USA sales of plant-based meats jumped 42 per cent between March 2016 and March 2019 to a total of US$888 million, according to Nielsen. Now, it sounds like Beyond is going, well, beyond to strengthen the case that its plant-based "meat" can't be beat.
And demand is expected to continue to grow.
Beyond Meat (NASDAQ:BYND) shares gapped up before the market opened on Tuesday.More news: Mac Miller Joins Free Nationals and Kali Uchis on ‘Time’
CEO Ethan Brown told analysts Friday the company can produce beyond what current forecasts require, as a result of diversifying its supplier base for key proteins in the plant-based burger and tripling production capacity since last summer. The burger, according to the company, "features marbling created to melt and tenderise like traditional ground beef".