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JPMorgan downgrades Annie's, sees more competition

NEW YORK (AP) -- Shares of Annie's declined Tuesday after a JPMorgan analyst downgraded the natural and organic food maker's stock rating, saying he expects tougher competition.

THE SPARK: Ken Goldman lowered Annie's shares to "Neutral" from "Overweight" and trimmed the price target on its stock by $2, to $44.

THE BIG PICTURE: The fast-growing company, known for its macaroni and cheese with pasta shaped like rabbits, went public in March 2012. In the fiscal year that ended this March, the Berkeley, Calif., company's revenue grew 20 percent to $170 million.

THE ANALYSIS: Goldman expects that at least one established organic food company will start selling organic macaroni and cheese and salty snacks, key Annie's products, potentially as soon as early next year. If that happens, the new products would likely take some market share from Annie's, Goldman said. He trimmed his earnings estimates for the next two years.

A representative for Annie's did not immediately respond to an email seeking comment.

However, Goldman said that he still considers Annie's "one of the best fundamental stories" among the companies he covers.

SHARE ACTION: Annie's Inc. stock dropped $1.93, or 4.4 percent, to $42.47 in afternoon trading Tuesday. The stock had gained 33 percent this year and has more than doubled from its initial public offering price of $19.