Beyond Meat Inc. (NASDAQ:BYND) is the story stock of the year so far, when it comes to IPOs and the follow-on interest.
After pricing its IPO at just 25/share earlier this year, the lowest the stock has traded has been 45, and its high has been nearly 240, it finished at 146.85 in NY Friday, and is attracting some interest again.
It was just in June, barely a month after the IPO, that JPMorgan downgraded its rating on Beyond Meat to Neutral from Overweight. The firm cited its lofty valuation at the time, and JPMorgan was 1 of the 2 Top underwriters in the IPO. The team had even raised its target price to 120 from 97 ahead of its formal downgrade in June. The problem was that the stock already had risen to about 168 ahead of that downgrade, and the company was perceived to have no profits in sight and a valuation that was just too difficult to justify.
Then on 20 August, JPMorgan reversed its downgrade and raised its rating back up to Overweight, also raisin Beyond Meat’s target price to 189 from 188, which compared with a 144.51 prior closing price on the day.
One issue that had weighed on Beyond Meat shares was, outside of last week’s harsh market sell-off that the company already went back to the markets with a secondary offering. This was no ordinary secondary offering, as it was effectively a release of many locked-up shares, and the company was hardly selling any shares. That means insiders and backers were getting out earlier than expected and the company realized no major benefit. Meaning, flagging insider confidence in the company.
That secondary offering took the shares down from 222 to about 195 on the announcement, and the deal’s pricing of 160 took its shares down as low as under 145 where it i today.
Beyond Meat may not be the first mover in vegetarian meat replacement choices. But, it has been signing more and more distribution deals, and what it does have is quality.
Also very expensive to bet against (Short) Beyond Meat, as finding shares to borrow for a short sale is not easy, and the cost of borrowing those shares is astronomically high considering that the recent secondary offering added so much more float. At the 31 July 2019, settlement date, Beyond Meat’s short interest was nearly 5.9-M shares.
As for the rating reversal from JPMorgan on Tuesday, 20 August the JPMorgan research team feels the recent sell-off made the shares more ‘appetizing’.
The company also is expected to be able to keep adding new food-service customers faster than many of its non-meat competitors, and the company’s latest guidance did not include the addition of Tim Hortons, Dunkin’, Aramark and Uno into that guidance. Also, for future sales from Subway, Blue Apron, HelloFresh and other.
The recent shopping data also indicates that consumers are taking a broader acceptance of the products as it rolls out “sausage” and other alternatives to traditional meats.
Know Ye that JPMorgan was with Goldman Sachs and Credit Suisse as lead book-running managers for the aforementioned secondary offering. The shareholders who bought shares at 160 were down almost 10% ahead of this upgrade. Now they are down only about 3%.
Beyond Meat’s post-IPO trading range is 45.00 – 239.71 and its prior consensus target price is at 165.43, and the stock was last seen at 145.75, -5.24, or -3.49%.
HeffX-LTN’s over all technical outlook for BYND is Neutral to Bearish with Key indicators now flashing Very Bearish, very light 1st support is at 119.27, and strong resistance is at 152.14.
Have a terrific weekend