Packages of Beyond Meat plant-based burger patties are displayed for a photograph in Tiskilwa, Illinois, April 23, 2019.
Daniel Acker | Bloomberg | Getty Images
Bernstein downgraded shares of Beyond Meat Wednesday on valuation concerns, joining J.P. Morgan as the latest Wall Street analyst this week to cool on the red hot IPO. There are now no analysts on Wall Street that recommend buying Beyond Meat, a rare phenomenon for a company that just went public last month and comes as a result of its monster run outpacing even the must bullish expectations.
“The downgrade is driven by valuation considerations as the stock has traded in a highly volatile manner since its IPO likely due to its limited public float and is now trading at ~31x EV/NTM Sales, implying limited upside potential from a valuation perspective,” wrote Bernstein’s Alexia Howard.
Bernstein goes to market perform from outperform. However the firm upped its price target to $123 from $107. There are now zero “buy” ratings on Beyond Meat and eight “hold” ratings, according to FactSet. No one says “sell.”
Beyond Meat shares dropped 25% to $126.04 on Tuesday after J.P. Morgan, a lead underwriter of the IPO, downgraded the stock. “This downgrade is purely a valuation call,” the J.P. Morgan note stated.
Beyond Meat shares were up more than 600% from its $25 IPO price through their intraday high on Monday before the two downgrades this week, with the rally driven by rising expectations of wider acceptance of the alternative meat and more deals with restaurants. The company on Tuesday released a “meatier” version of its burgers. The shares began trading on May 2nd.
“Despite the valuation considerations, we continue to expect significant growth potential in the plant-based meat category and believe that Beyond Meat is well positioned as one of the frontrunners leading the new wave of plant-based meat products,” Bernstein added.
The stock was up slightly in premarket trading Wednesday.
— With reporting by Michael Bloom