Beyond Meat shares drop after Bernstein downgrades the hot stock, calling it overvalued

Ethan Brown, founder and chief executive officer of Beyond Meat Inc., speaks during the company's initial public offering (IPO) at the Nasdaq MarketSite in New York, U.S., on Thursday, May 2, 2019.
Michael Nagle | Bloomberg | Getty Images

Bernstein lowered its rating on Beyond Meat on Tuesday and said the red-hot stock was now fairly valued after the recent run-up.

Shares of Beyond Meat are up 55% since the start of the year. Trading was briefly halted on Tuesday due to volatility as activity in the cult name picks up, frustrating short sellers. This is the second big rally in the young stock, which also jumped last summer following its May IPO before crashing back to earth.

"As the risk/reward has become less attractive following the recent rally, we are downgrading Beyond Meat from Outperform to Market-Perform while keeping our target price at $106," Bernstein analyst Alexia Howard said.

The company made more news last week when McDonald's announced it was expanding its plant-based burger trials in Canada. At the same time, the company's main competitor Impossible Foods said it would not be able to produce enough meat to partner with the fast food giant.

More In Pro News and Analysis

CNBC ProClassic value investor Mason Hawkins loads up on GE and this surprising tech name
CNBC ProThe Federal Reserve’s Jackson Hole meeting could shake up markets in the week ahead
CNBC ProMeet the secretive biotech hedge fund whose elite clients include the Tisch family, Yale's endowment