A tough road lies ahead for Oatly , according to Credit Suisse. Analyst Kaumil Gajrawala downgraded the stock to neutral from outperform and slashed its price target to $3.43 from $6, roughly in line with where shares closed Monday at $3.30. The stock dipped 0.6% in Tuesday premarket trading. “We downgrade shares to Neutral ahead of what is expected to be a particularly volatile consumer environment in Europe and Asia,” Gajrawala wrote in a Tuesday note. “Inflation and unpredictable lockdowns have already hurt Oatly’s ability to compete against peers with more capacity. These headwinds should strengthen with colder months ahead, delaying the growth and margin story yet again,” Gajrawala added. The stock is down roughly 58% this year and is about 82% off its 52-week high, but the Swedish dairy-alternative food company is dealing with the effects of greater inflation in Europe that will be more severe than elsewhere, according to the note. “Recent inflation reads were +9% y/y and could go higher as energy demand increases. Retail data shows consumers are turning to private label and management has cited less new customer trial/conversion (growth) from dairy,” the analyst wrote. Additionally, the analyst pointed to spotty China lockdowns that will continue to hinder Oatly’s expansion plans overseas, as well as the difficulty of passing through price hikes in the U.S. for oatmilk. “Double-digit price hikes went through on 8/1 with August retail data showing a sharp oat milk volume (EQ) deceleration to +1.5% y/y, down from +11% in the L12 weeks,” Gajrawala wrote. “Even if plant-based milk demand is durable, we think widening the price gap while inflation runs hot may cause switching. It is too early to know if there will be a lasting impact,” Gajrawala added. —CNBC’s Michael Bloom contributed to this report.