(Bloomberg) -- Beyond Meat Inc. fell in its worst day since its initial public offering, pausing rally that has rocketed the stock more than 500% higher, after the last bullish analyst among the fake-meat company's underwriters threw in the towel.
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 Monday was too much, said the analyst.
The shares fell 25% to $125.23 in New York Tuesday. The stock had surged 572% higher from its debut through Monday as restaurants companies including Tim Horton's and Chanticleer Holdings Inc., which owns several burger brands and operations a handful of Hooters restaurants, test its alternative meat products. Meanwhile, reports Tuesday that McDonald's Corp. may extend tests of a plant-based burger made by Nestle SA, also likely presssured Beyond Meat shares.
“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. JPMorgan carries a price target of $121, while the average price target of $94 implied a 26% decline from Tuesday's closing price.
--With assistance from Gaurav Panchal.
To contact the reporter on this story: Phil Serafino in Paris at pserafino@bloomberg.net
To contact the editors responsible for this story: Courtney Dentch at cdentch1@bloomberg.net, Beth Mellor, Jon Menon
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