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Beyond Meat Slumps After JPMorgan Downgrade Cites Stock Overshoot, Increasing Competition

JPMorgan analyst Ken Goldman said Beyond Meat's recent rally has been "above and beyond what we consider rational even for a good company."

Beyond Meat  (BYND) - Get Beyond Meat Inc. Report shares traded lower Friday after analysts at JPMorgan lowered their rating on the plant-based food group amid concern that the stock's recent rally is 'not supported by fundamentals."

JPMorgan analysts Ken Goldman cut his rating on Beyond Meat to 'underweight' from 'neutral', with a price target of $122 per share, following a six-month rally for the El Segundo, California-based group that has lifted its share price by more than 190%, a move Goldman said was "above and beyond what we consider rational even for a good company like Beyond Meat".

Goldman also noted that "sluggish fundamentals" for the plant-based food group, as well as intensifying competition from rivals such as Impossible Foods and a hesitancy from some restaurants to add its products to menus amid the coronavirus pandemic have made him wary of the stock's lofty valuation. 

Beyond Meat shares were marked 3.3% lower in early trading following the JPMorgan note to change hands at $152.32 each, a move that would peg that stock at more than double the level it was trading on New Year's Eve.

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Last month, Beyond Meat reported a second quarter loss of $10.2 million as the cost of re-routing its burgers and sausages from restaurants to retail outlets during the peak of the coronavirus pandemic ate into its bottom line.

Overall sales, however, rose 70% from last year to $113.3 million thanks in part to a tripling of U.S. revenues, which it $90 million, and a near doubling of its overseas sales, which came in just under $10 million.