Should you buy Beyond Meat now? - Yahoo Finance

If you are thinking of snapping up fake-meat stock Beyond Meat (BYND), the Street has some resounding advice for you. Don’t bother. Since its IPO in early May the stock has exploded more than 550%. That includes a 75% sprint in the last five days. The result: what was once a $25 stock, is now trading at a whopping $168. And now the Street is getting cautious.

The LA-based producer released the first plant-based burger to be sold in the meat section of international grocery stores. So far the company is enjoying immense success. It has just reported stellar Q1 results and expects revenue to double over the next year to $210 million. But does its stock still have further upside potential after this tremendous rally? “At some point, the extraordinary revenue and profit potential embedded in [Beyond Meat] will be priced in,” JP Morgan analyst Kenneth Goldman told investors (he has a $120 price target on the stock).

Indeed, Jefferies’ Kevin Grundy is one of the best-performing analysts covering the stock. He reiterated his Hold rating on Beyond Meat on June 10 with a price target of just $105 (38% downside potential). According to Grundy, expectations were “very high,” which means everything needs to go right for shares to continue their upward trajectory. But the analyst did concede that McDonald’s (MCD) and Yum Brands’ KFC (YUM) proposed test of plant-based meat products this year is an exciting prospect for the stock. "At least one major quick-service restaurant chain likely will become a customer by the end of the year," the analyst told investors, adding “Post-trial adoption would offer upside to guidance.”

Also sticking to his neutral rating is Merrill Lynch’s Bryan Spillane. He believes that BYND can disrupt the US meat industry, but with risks as more companies ramp up. “Our Neutral rating is based on our view that Beyond Meat is positioned well to disrupt the $270bn US meat industry and gain share as consumer acceptance for meat alternatives grows, BYND refines its products and expands across retail, foodservice and international channels” explained Spillane. “However, we see risk from a competitor standpoint as more companies enter the fast-growing category and ramp up investments” the analyst concluded.

After the company reported ‘well done’ earnings results, Spillane raised his revenue estimates for FY19, FY20 and FY21 from $195m, $308m and $430m to $220m, $344m and $486m, respectively, based on increased expectations on strategic customers and demand. This led to a price target boost from $85 to $101- still dramatically undercutting the current share price.

Overall, if we look at all the analyst ratings, the stock shows a slightly optimistic Moderate Buy consensus. That’s down to the 2 Buy ratings counteracting the 6 Hold ratings. But the average analyst price target of $117 suggests the stock has over 30% downside potential ahead. What’s most worrying is that even the highest analyst price target still suggests that BYND will pull back 26%.

However if we turn to the best-performing analysts, we can see that the consensus shifts- in a bearish direction. The overall consensus is now a firm Hold, with four Hold ratings and only one Buy rating. Meanwhile the average analyst price target remains $117.