According to Credit Suisse, Oatly has a tough road ahead. Analyst Kaumil Gajrawala downgraded the stock to neutral from outperform and lowered his price target to $3.43 from $6, roughly in line with where the stock closed at $3.30 on Monday. The stock was down 0.6% in premarket trading on Tuesday. “We are downgrading the stock to neutral ahead of what is expected to be a particularly volatile consumer environment in Europe and Asia,” Gajrawala wrote in a note on Tuesday. “Inflation and unpredictable blockages have already hurt Oatly’s ability to compete with larger-capacity rivals. These headwinds should intensify with the coming colder months, again delaying the growth and margin story,” Gajrawala added. Shares have fallen about 58% this year and are about 82% lower than in 52 weeks, but the Swedish alternative dairy company is grappling with the effects of higher inflation in Europe, which is expected to be much more severe than elsewhere. Note. “Recent inflation figures were +9% y/y could increase as energy demand rises. Retail data shows consumers are turning to private labels and management reported less new customer trials/switching (growth) away from dairy,” wrote the analyst. In addition, the analyst pointed to spotty blockades in China that will continue to hinder Oatly’s overseas expansion plans, as well as difficulty transitioning to higher U.S. oat milk prices. “Double-digit price gains took place on 1/8 Aug retail data showing a sharp deceleration in oat milk (EQ) volumes to +1.5% y/y, down from +11% in L12 weeks,” Gajrawala wrote. “While the demand for plant-based milk is persistent, we believe the widening of the price gap while inflation is running may cause a change. It is too early to know if this will have a lasting impact,” Gajrawala added. —CNBC’s Michael Bloom contributed to this report.