If volatility was a vegan patty, the Beyond Meat (BYND) offering would be selling by the truckload. Shares of the meat industry disruptor are up by 54% year-to-date. The wild ride continues last year’s action-packed performance; following its public listing in May, the stock surged by more than 420% to a high of $239.71 in July, before crashing all the way down to $73.6 in mid-December.
The jury is still out on whether Beyond Meat really has what it takes to become a marquee name in the 2020s, as a number of questions regarding its road to long-term success still remain a moot point; Do consumers care enough about brand burgers? Are plant-based meat brands likely to become a thing? Can the new company withstand the increasing competition from other industry players? Are barriers to entry in plant-based meats more than trivial? All currently remain unanswered.
Beyond Meat’s recovery from last year’s lows has been partly attributed to speculation of a possible partnership with either McDonald’s or KFC. The former gave BYND a small run-out in Canada last year, with the addition of a menu item titled the P.L.T. (plant, lettuce, and tomato). The experiment has been extended upon this year; McDonald’s have added the item to a further 52 restaurants, in turn fueling hopes it might make it a permanent addition to the fast food giant’s menu. Where the latter is concerned, a test for a Beyond Meat menu item called Beyond Fried Chicken recently expanded from a single restaurant in Atlanta to more than 60 locations in Charlotte, North Carolina, and Nashville, Tennessee. If a partnership with either materializes, there’s no need to explain the impact the news will have on the price action.
There are a number of reasons why Oppenheimer’s Rupesh Parikh looks favorably upon the Beyond Meat brand. The 5-star analyst cites the company’s track record of innovation, longer-term prospects, and positioning as attractive. However, the recent gain and the company’s high stock valuation — the forward price-to-earnings ratio is 283 – are currently keeping him on the sidelines.
Parikh said, “Going forward, we expect a volatile trade to continue driven by potentially lumpy foodservice wins & losses and prospects for an increasingly competitive backdrop. On the print specifically, we have less conviction given seemingly high expectations of a potential US McDonald’s win but still very high short interest levels north of 40%. We continue to look very favorably upon BYND’s longer-term prospects and would await a more attractive entry point.”
Accordingly, Parikh maintains a Perform rating on BYND, without suggesting a price target. (To watch Parikh’s track record, click here)
Bernstein’s Alexia Howard takes a similar view: “We continue to believe that Beyond Meat’s near-term sales growth potential in the U.S. is largely priced in at this point, however, there could be upside if Beyond Meat further expands its capacity and more meaningfully expands into international markets.”
Howard maintains a Hold rating on the stock but has bumped up her price target from $106 to $117. (To watch Ellis’s track record, click here)
Overall, sentiment on the Street indicates a cautious approach to the meat industry disruptor’s prospects; All 6 analysts tracked over the last 3 months recommend BYND as a Hold. The average price target comes in at $124.2 and indicates a modest upside of 5%. (See BYND stock analysis on TipRanks)