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Beyond Meat Falls More than 10% after Barclays’ Downgrade

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Today, Benjamin Theurer of Barclays double downgraded Beyond Meat (NASDAQ:BYND) from an “overweight” to “underweight” rating. As reported by MarketWatch, he’s concerned about weakness in the foodservice industry in the near term. In Theurer’s note to clients, he said that before the outbreak, the alternative-meat producer increased its exposure to the foodservice industry to approximately 50% of its sales. The COVID-19 outbreak has disrupted the foodservice industry due to temporary closures and service restrictions. Theurer doesn’t expect a full recovery in the foodservice industry before 2021. He projects a downside risk for Beyond Meat due to its exposure to the industry.

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Theurer said that Beyond Meat also has greater exposure to the foodservice industry in international markets. McDonald’s tried two burgers with Beyond Meat’s patty in a few restaurants in southwestern Ohio from September 2019 to April 2020. Last week, CBC News reported that McDonald’s removed all of the information on the burgers from its website without providing an update. Theurer said that customers’ response was below the expectations.

Despite the double downgrade, Theurer raised his target price for Beyond Meat from $100 to $115. However, he was concerned about the company’s high valuation multiple. The new target price represents a potential fall of 18.8% from the closing price on June 26.

Other analysts’ recommendations for Beyond Meat

Since Beyond Meat reported its first-quarter earnings on May 5, Credit Suisse, Berenberg, Bank of America, UBS, D.A. Davidson, Jefferies, J.P. Morgan, and Piper Sandler have all raised their target price for the stock. On May 19, BTIG initiated coverage on the stock with a “buy” rating and a target price of $173. Meanwhile, Wall Street favors a “hold” rating for Beyond Meat. Among the 19 analysts, 47.4% recommend a “hold,” 21.1% recommend a “buy,” and 31.6% recommend a “sell.” As of today, analysts’ consensus target price is $100.42, which represents a potential fall of 29.1%.

Stock performance

Today, Beyond Meat was trading over 10% down as of 10:10 AM ET. The double downgrade from Barclays made investors skeptical. However, the company has outperformed its peers and the broader equity markets this year. Beyond Meat has returned 87.4% YTD as of June 28. The impressive first-quarter earnings, the introduction of innovative products, and aggressive expansion led to a rise in the company’s stock price. Meanwhile, the S&P 500 Index has declined by 6.9%. Tyson Foods (NYSE:TSN) and Kellogg (NYSE:K) have fallen by 36% and 7.7%, respectively.

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