Bernstein Downgrades Beyond Meat Amid Growing Valuation Concerns

Plant-based food maker Beyond Meat Inc BYND received its second analyst downgrade in as many days on Wednesday.

The Analyst

Bernstein's Alexia Howard downgraded Beyond Meat from Outperform to Market Perform with a price target lifted from $107 to $123.

The Thesis

Beyond Meat could perform well within the "new wave" of plant-based meat-alternative food products, Howard wrote in the note. These food items tend to be complex to create so Beyond Meat's moat could be an advantage. The company hopes to sell at least one product at a price point that is competitive versus traditional meat. In fact, this could happen sooner than expected due to food safety concerns stemming from the African Swine Flu epidemic in China.

However, Howard said Beyond Meat's stock is trading at around 31 times EV/next 12 months sales, which suggests minimal upside potential from current levels. Even if the company inks a supply agreement with a major fast-food chain, some of the incremental benefits are already priced into the stock.

Tigress: 'Significant' Downside Potential

Beyond Meat's stock tumbled 25 percent Tuesday but shares still have "significant" downside potential, Tigress Financial Partners' Ivan Feinseth wrote in his daily newsletter. After losing a quarter of its value in one day, Beyond Meat's $7.5-billion equity market value is still five times larger than the current total addressable market for plant-based protein alternatives.

Feinseth said traditional food companies are pouring in the plant-based alternative space, including Tyson Foods, Inc. TSN. The larger food makers may be able to produce their own products at a "much lower cost," which will make the relatively new food a "commodity product" in the future.

Beyond Meat's stock traded around $134.70 per share at time of publication, up 7 percent.

Related Links:

JPMorgan Says Beyond Meat 'Beyond Our Price Target,' Cramer Highlights 'Irrational' Move

Beyond Meat Taking A Bite Out Of Short Sellers