Investing.com – Beyond Meat (NASDAQ:BYND) rallied sharply Tuesday after JPMorgan upgraded its rating on the plant-based-burger maker, citing an attractive valuation following a steep decline in recent weeks.
JPMorgan raised its rating on Beyond Meat to overweight from neutral and lifted its target price to $189 a share from $188 a share, sending shares 6% higher.
The stock has slumped 40% since its high on July 26, making its valuation more palatable, JPMorgan said.
As well as an attractive valuation, continued signs of rising dollar takeaway growth (a measure of performance in the food sector) and the potential to acquire new food-service customers were outlined as supportive factors.
In a sign Beyond Meat’s products are catching on with consumers, the dollar takeaway for the company was up 186% year over year in the last 13 weeks, the highest in nearly three years, JPMorgan) said, citing Nielsen data.
The bank also suggested that current estimates on the plant-based burger market were undervaluing the company somewhat as they failed to incorporate sales of the company’s products to the Tim Horton's, Dunkin' Donuts (NASDAQ:DNKN) and Uno's chains and Aramark (NYSE:ARMK), which operates cafeterias in schools, businesses and other locations.
The decline in shares of Beyond Meat) arrived after the company reported wider-than-expected losses last month and a surprise secondary offering.
But JPMorgan's note said the selloff was somewhat overdone as only a small proportion of shares were placed in the offering.
"We appreciate that the secondary offering spooked many investors; however, founder/CEO Ethan Brown trimmed only a tiny portion of his holdings, and we cannot blame anyone involved pre-IPO for locking in some gains," JPMorgan said.
Beyond Meat) is up more than 500% since it went public at $25 on May 1. It has a consensus price target of $165.29 among analysts' forecasts compiled by Investing.com.