Shares of Beyond Meat (BYND) are on the rise after JPMorgan analyst Ken Goldman upgraded the stock to Overweight, calling shares "appealing once again" following a 40% move off their prior best level.
BUY BEYOND MEAT: In a research note to investors, JPMorgan's Goldman upgraded Beyond Meat to Overweight from Neutral, citing the potential to acquire new foodservice customers, continued strength in measured Nielsen data and valuation. While the secondary offering spooked investors, the analyst highlighted that founder and CEO Ethan Brown trimmed just a tiny portion of his holdings. Furthermore, with cash-on-hand likely to exceed $300M by the end of the third quarter, another guidance raise potentially ahead, and the stock about 40% off its high, Goldman thinks the stock is "appealing once again."
After the post-IPO outperformance, Beyond Meat shares have plunged since July on a secondary stock offering, a bigger than expected second quarter loss and a broader market selloff.
OTHER RATING CHANGES IN THE SPACE: JPMorgan's Goldman also upgraded Campbell Soup (CPB) to Neutral from Underweight based on valuation, the potential for an improved topline and what he views as achievable consensus forecasts. The analyst told investors that he does not see enough growth, nor a sufficiently compelling valuation story to be Overweight, but being Underweight is "too pessimistic."
Additionally, he downgraded both McCormick (MKC) and Hain Celestial (HAIN) to Underweight from Neutral and lowered his price targets to $150 and $18, respectively. The analyst cited valuation, Brexit risk and the potential for the next acquisition to "disappoint" in size for McCormick’s downgrade, noting that it was unrelated to his thoughts about fundamentals, strategy and management, which he sees as first-rate. Regarding Hain Celestial, the analyst based his rating change on Brexit and currency risk, organic sales risk, the potential for divestitures to raise less cash than expected and valuation. Goldman pointed out that he is not negative on Hain's strategy, but feels that a number of near-term headwinds may not properly be reflected in the stock price. Additionally, the analyst said he can no longer recommend paying a premium for a company likely to sport margins and returns well below average for a long time.
PRICE ACTION: In afternoon trading, shares of Beyond Meat have jumped almost 7% to $154.25.
Hain Celestial
-2.63 (-12.02%)
McCormick
-7.445 (-4.42%)
Campbell Soup
-0.22 (-0.51%)
Beyond Meat
+9.66 (+6.69%)