Oprah Winfrey Backed Oatly, But The Short Seller Target Is Losing More Analyst Support

Zinger Key Points
  • The price target reduction from Credit Suisse comes after Spruce Point Capital accused Oatly of falsifying its revenue and margins. 
  • Oprah Winfrey was part of a group of high-profile investors that invested in the company ahead of its IPO.

Oatly Group OTLY faces a consumer environment that is likely to become “particularly volatile” in Europe and Asia, according to Credit Suisse.

The Oatly Analyst: Kaumil Gajrawala downgraded the rating for Oatly to Neutral, while reducing the price target from $6 to $3.43.

The Oatly Thesis: The company’s competitors have more capacity and its ability to compete has been impacted by inflation and unpredictable lockdowns, Gajrawala said in a downgrade note.

Check out other analyst stock ratings.

“These headwinds should strengthen with colder months ahead, delaying the growth and margin story yet again,” the analyst wrote.

“Inflation is sticky everywhere but the impact in Europe (50% of LTM revs) should be more acute given the weaker economy,” lockdowns in China are disrupting Oatly’s retail expansion plans, while the U.S. is also at risk due to double-digit price hikes, he said.

Given tight liquidity, Oatly could raise an estimated $200 million of debt as a cushion, Gajrawala further stated.

Among the celebrities that were early investors in Oatly was Oprah Winfrey, who has been an advocate for plant-based diets. The company sold a $200 million stake to a group of high-profile investors, which included Winfrey, Natalie Portman and Jay-Z, ahead of its IPO.

The price target reduction from Credit Suisse comes after Spruce Point Capital Management, earlier this year, accused the company of falsifying its revenue and margins. 

OTLY Price Action: Shares of Oatly had declined by 8.94% to $3.00 at the time of publication Tuesday.

Also Read: August Inflation Runs Hot, Melting Stocks As Bears Reemerge: What Investors Need To Know

Photo: Courtesy of oatly.com and The Garner Circle PR LLC on flickr

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Posted In: Analyst ColorPenny StocksShort SellersDowngradesPrice TargetSmall CapAnalyst RatingsCredit SuisseKaumil GajrawalaSpruce Point CapitalSprucepoint Capital
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