Shares of Beyond Meat (BYND -3.83%) dropped today after Bernstein analyst Alexia Howard said it will underperform the market and lowered the stock's price target. This reputable analyst's bearish sentiment has retail investors reconsidering their positions, sending shares lower. As of 10:30 a.m. EDT, Beyond Meat stock was down 3%, but had dropped as much as 5% earlier in the day.
Beyond Meat stock has experienced incredible gains in 2020. Even after today's pullback, shares have still gained over 140% so far this year, and over 37% in just the past month. Investors certainly shouldn't expect any stock to post monthly double-digit stock gains over the long term. This being the case, it's not unreasonable to say Beyond Meat stock will struggle to beat the market in the near term.
However, Howard doesn't just think Beyond Meat stock will fail to beat the market. Howard went a step further by setting a $136 per share price target on Beyond Meat stock. Even after today's pullback, that's meaningful downside.
So could Beyond Meat stock really plummet to $136 per share in the near term? It's entirely possible. But price targets shouldn't be a core part of an investing thesis. Buying stocks makes investors part owners of a business, so tracking fundamental business results are more important. This year, Beyond Meat has signed on new distribution partners and launched new products, all of which weren't factored into the company's full-year 2020 guidance. In short, the business is doing well, likely better than its management forecasted at the beginning of the year.
When a business is doing well, it's often best to keep holding. Stocks are volatile -- they swing up and down in the short term. Timing those swings accurately and consistently isn't easy, and can lead to big losses if investors get it wrong. That's why it's best to stay the course with top growth stocks, ignoring the volatility Beyond Meat is experiencing today.