Beyond Meat lost some of its sizzle after a Wall Street analyst said the veggie-burger maker’s surging stock price has finally gotten ahead of itself.
The company’s shares — which as of Monday had surged 572% since their May 2 debut on the Nasdaq — lost 25% Tuesday, to close at $126.04, after the downbeat analysts’ note.
“This downgrade is purely a valuation call,” JPMorgan analyst Ken Goldman wrote, noting that demand for Beyond Meat’s veggie burgers, which are available at chains like Carl’s Jr. and TGI Fridays, appears to be booming.
But “with a valuation this elevated, any hiccup in performance — real or perceived — could lead to a meaningful correction of the share price.”
Shares of the El Segundo, Calif.-based company’s shares recently hit $168, valuing it at more than $7 billion.
To justify that price, Goldman said investors would have to swallow the belief that Beyond Meat’s revenues will reach $5 billion by 2029. In 2018, sales clocked in at just over $100 million.
“Is $5 billion in sales in 10 years out of the question? No, but it’s not likely, either,” Goldman wrote, cutting his recommendation on the shares to neutral from overweight.
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He went on to warn that, in the coming quarters, “not all of the news flow will be positive” and that “competitors are getting more aggressive.”
Separately Tuesday, Beyond Meat said its new and improved patties — which have been available at eateries since January — will be shipping to grocery stores this week.
The new burgers “feature marbling designed to melt and tenderize like traditional ground beef,” the company said in a statement.
They’re made from ingredients including mung beans and rice proteins, while the earlier versions were made from just pea proteins.
Mung beans were derided in a 2006 episode of “The Office” in which the character Creed Bratton admits that he grows mung beans on a “damp paper towel” in his desk drawer and that they “smell like death.”