BellRing Brands (BRBR) reported weaker fiscal Q2 results, with slowing ready-to-drink, or RTD, shake growth, rising promotional activity, and increasing cost pressures affecting margins, BofA Securities said in a note Wednesday.

Growth in the RTD shake category has slowed to about 8%, compared to prior teens growth rates, while broader sentiment toward small- and mid-cap consumer staples companies has weakened, the firm said, adding there is limited visibility into near-term recovery in revenue or margins.

The firm said promotional activity increased sharply in Q2, with about 27% of RTD shake category volume sold on discount, up 8% year-over-year. At the same time, costs are rising, particularly for freight and protein, and these pressures are expected to continue through fiscal 2027, though they may ease moderately.

Looking ahead, demand for protein products is still strong overall, the firm said, adding "should BellRing effectively execute against its innovation pipeline, pricing discipline and cost optimization, there is potential for the gap between BellRing and the category to close and move us toward a more constructive stance."

BofA downgraded BellRing Brands to underperform from neutral and cut its price target to $10 from $19.

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