After a 572% gain in Beyond Meat shares since its May 1 initial public offering through Monday’s close, one of the last bulls among the fake-meat company’s underwriters is throwing in the towel, sending shares lower Tuesday.
JPMorgan Chase & Co.’s Ken Goldman cut his recommendation on the stock to neutral from overweight, saying it’s now too expensive, with a $10 billion enterprise value that’s 27 times estimated 2020 sales. The two-day frenzy that lifted the stock 69% from Thursday’s close through yesterday’s close was too much, said the analyst.
“This downgrade is purely a valuation call,” JPMorgan’s Goldman wrote. “With a valuation this elevated, any hiccup in performance — real or perceived — could lead to a meaningful correction in the share price.”
Risks to the stock price include the El Segundo, California-based company’s increasingly aggressive competitors and the end of the lockup period in October, he said. The stock now has one buy rating, eight holds and no sells among analysts tracked by Bloomberg.
The shares fell as much as 17% to $139.30 just after the New York open. JPMorgan carries a price target of $121, while the average price target of $94 implied a 44% decline from Monday’s closing price.