Beyond Meat Inc.’s stock was downgraded to underweight from neutral at JPMorgan on Friday with analysts citing market share loss at grocery stores to its biggest competitor, Impossible Foods Inc.
Analysts also cited a pullback at restaurants, which are slower to add “complexity” to the menu during the COVID-19 pandemic.
JPMorgan has a $122 price target on Beyond Meat /zigman2/quotes/211617595/composite BYND -1.89% .
“In the long run, we believe Beyond Meat’s growth opportunity is excellent, and we see the company as well managed with strong innovation and marketing plans,” JPMorgan said. “But we believe Street estimates are a bit aggressive right now – especially with chief rival Impossible Foods making strong inroads into Beyond Meat’s on-shelf presence, and with many restaurants not adding menu items – and we think the stock is ahead of itself.”
Beyond Meat shares have nearly doubled for the year to date, up 96.6%, while the S&P 500 index /zigman2/quotes/210599714/realtime SPX +1.13% has gained 0.6% for the period.
CFRA also downgraded Beyond Meat, to sell from hold, and cut its 12-month target to $100 from $130.
“Due to intensifying competition (both local and abroad) from other pure-play alternative meat companies and from larger packaged food companies, along with an expectation that Beyond Meat will continue to aggressively lower prices to reach price parity with traditional animal meat, we now find it difficult to believe Beyond Meat’s margins will exceed its packaged food peers,” Arun Sundaram wrote.
Impossible Foods, home of the Impossible Burger, has made gains on Beyond Meat, and done it fast, according to JPMorgan.
In just the past couple of months, Impossible Foods has expanded into Canadian retail , expanded its presence at Kroger Co. /zigman2/quotes/206215053/composite KR +0.03% nationwide , and secured $200 million in funding. That’s on top of $500 million in funding earlier this year.
Certainly, Beyond Meat isn’t taking a rest. Just this week, the company expanded its lineup with Beyond Meatballs , the third launch this year after Beyond Sausage and Cookout Classic.
Moreover, Beyond Meat is thinking beyond the U.S. grocer’s shelf. The company has launched a direct-to-consumer operation that expands its reach. Impossible Foods launched a direct-to-consumer channel this summer as well.
Canaccord Genuity applauded the move from Beyond Meat as one that’s expected to drive incremental revenue, deepen customer relationships and take advantage of the grocery shift to e-commerce.
Canaccord Genuity rates Beyond Meat shares hold with a $140 price target.
Beyond Meat has also brought its products to international markets like Brazil , and China, where Beyond Meat began selling at Shanghai grocery stores over the summer, and is launching manufacturing facilities .