What happened
Shares of Beyond Meat (BYND -1.46%) fell 3.6% on Wednesday after research firm CFRA issued a note of caution to shareholders of the plant-based food leader.
So what
Analyst Arun Sundaram cut his rating on Beyond Meat from buy to hold following the stock's steep rise in recent weeks. Sundaram said he expects the meat-alternatives company to post larger losses in 2021 than he previously forecast due in part to higher labor and shipping costs. In turn, he increased his full-year loss per share estimate from $1.15 to $1.24.
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Still, he remains positive on Beyond Meat's "long-term growth story," thanks to its "well-executed [research and development] and marketing strategies."
Now what
Beyond Meat's sales were dented by the coronavirus crisis, as many of its restaurant customers were forced to shutter their stores. Yet with vaccinations steadily increasing and many restaurants enjoying a rebound in customer traffic, Beyond Meat's revenue could receive a boost.
With the company's expansion investments likely to weigh on its near-term profitability -- and with its shares up more than 30% from their lows in early May -- Beyond Meat's stock price may have come too far too fast. It's thus understandable that Sundaram recommended investors hold off on buying more shares at current prices.
