Shares of the El Segundo, Calif., foods company at last check were down 2.7% to $137.40.
Analyst Wendy Nicholson, who set a $123 price target on the shares, said in a note to clients that "Beyond Meat is a leader in the plant-based-meat market, benefiting from a well-known brand that has been developed in both the refrigerated-meat section of the grocery store and, more recently, in food-service locations."
The company has grown sales almost tenfold over the past two years, Nicholson said, and she expects 2020 to be another strong year of growth for Beyond Meat, despite headwinds in the food-service business related to the coronavirus pandemic.
"However," she added, "given that we expect the company to face both (i) near-term pressure as a result of its exposure to the food-service segment and (ii) longer-term pressure as the category becomes more competitive, we are initiating coverage with a sell rating and a $123 target price," about 15% down from the current price.
Nicholson said Beyond Meat, which tends to be slightly more expensive than other plant-based offerings, recently launched its first value-focused multipack option on June 22 in retailers like Walmart (WMT) - Get Report and Target (TGT) - Get Report.
"Though we do view this positively as an important step forward to achieving price parity with at least one protein source by 2024, we also see it as evidence of the category’s competitive nature," the analyst said.
"As large players get more competitive in the category, Beyond will have to step up its game to retain its first-mover advantage and remain relevant with consumers."
Last month, Barclays analyst Benjamin Theurer downgraded the plant-based meat seller to underweight from overweight.