MIXUE GROUP (02097) saw its shares plummet by 5.04% in intraday trading on Tuesday, following a downgrade by BofA Securities from Neutral to Underperform. The significant drop comes amid growing concerns that the company's fundamentals may not support its current valuation.

BofA Securities, while raising its target price for MIXUE GROUP from HKD400 to HKD465, expressed skepticism about the stock's recent performance. The research report highlighted that much of the good news has already been priced in, and the recent rally has been primarily driven by capital inflows rather than fundamental strengths. Analysts emphasized that such capital flows cannot sustain the share price indefinitely.

The downgrade comes in the context of MIXUE GROUP's impressive post-IPO performance, with its share price having surged about 1.8 times since its listing in early March. However, questions are now being raised about the company's classification in the "new consumption" sector and its earnings potential. BofA Securities noted that MIXUE GROUP's EPS upside potential is likely far lower than that of other companies in the sector, such as POP MART, further justifying the bearish outlook.