Following analyst upgrades, the Beyond Meat stock price jumped 50% in a month. Now struggling to break $150, BYND may have risen too much, too soon.
Beyond Meat (BYND: NASDAQ) is last trading at $147.63, higher by $2.38 (+1.64%)
A rare double upgrade gave plant-based burger brand Beyond Meat a welcome boost last month. Firstly, Sanford C. Bernstein raised BYND’s rating from underperform to outperform. Additionally, they increased their price target from $101 to $130.
The report forecasts demand for Beyond’s products will ‘significantly’ improve as economies rebound from the pandemic. Furthermore, recent alliances with McDonald’s and KFC will increase the brand’s exposure.
Moreover, a new facility in the Netherlands will lower the brand’s European production cost, providing additional tailwinds for the stock.
The report came at the perfect time for bulls. BYND had dropped 54% from its $221.00 January high, and by May was struggling around $100 per share.
A month later, the price is mid-way between $100 and $200, which begs the question: Can Beyond’s current bullish momentum continue, or should investors exercise caution at this price?
The daily chart shows the stock has climbed above the important 100, and 200-day moving averages at $140.41 and $143.49.
This reinforces the bullish outlook. However, the MACD shows the rally appears to be fading, and momentum may soon turn negative. Moreover, apart from the initial bump after the report, the declining trading volume indicates buying is slowing.
Therefore, if BYND breaks below the support of the 100 DMA at $140.24, shorts may sell the technical breakdown. Sellers should then place a buy stop to close the position if BYND recovers the 200 DMA at $143.49.
A logical area to take profit would be the 26th of May high at $127.88.
Alternatively, bullish traders may wish to open long positions here and close below the 100 DMA at $140.41. A long trade would target the 8th of June high at $157.50.
Both scenarios offer a low-risk vs. high reward trade. However, my view is the stock could go either way from here and I will remain neutral at this level.
Follow Elliott on Twitter.
