Stocks of former market enthusiast, vegetarian burger maker Beyond Meat (NASDAQ :), turned volatile during pandemic trading. The extreme movements at this plant-based meat producer indicate that investors remain uncertain about future growth and view the stock as overvalued.
The latest slump, which drove stocks down 30% in the past two months, began after the California-based company missed analysts' sales forecasts in January as the COVID-19 pandemic continues to hurt its restaurant sales.
Beyond Meat shares closed at $ 135.25 Wednesday, well below its January high of $ 203.44 and nearly 50% below its all-time high of $ 234.90 reached in the summer of 2019. The restaurant sales fell to about $ 23 million in the past quarter of 2020 from about $ 60 million in the year-ago period.
Beyond Meat Weekly Chart.
Despite the pandemic setback, we continue to believe that Beyond Meat is a great food supply to own. The recent weakness is a bump in the company's long-term growth potential. BYND & # 39; s latest partnerships and expansion plans confirm this positive case.
Beyond Meat announced yesterday that it will open a manufacturing facility in China, the first outside the US, to produce and distribute its plant-based products, including Beyond Pork, made specifically for the Chinese market.
"The opening of our dedicated plant-based meat facility in China marks an important milestone in Beyond Meat's ability to compete effectively in one of the world's largest meat markets," said Ethan Brown, CEO and founder of Beyond Meat.
In January, Beyond Meat finalized its agreements with McDonald & # 39; s (NYSE 🙂 and Yum! Brands (NYSE 🙂 – two of the largest fast food companies in the world. Three-year deal with McDonald & # 39; s makes Beyond Meat the & # 39; supplier of choice & # 39; off the chain for the McPlant patty. Beyond Meat and McDonald & # 39; s will also explore ways to develop other plant-based menu items, including alternative chicken, pork and eggs.
Competition is Better
In addition to these partnerships, BYND began selling meatless hot Italian sausage at 400 Walmart (NYSE 🙂 locations in the US last month. sells at 2,400 retailer locations, will also expand distribution of its cooking-themed value package to 500 Walmart stores.
Analysts at Stephens believe BYND is a good buy following its recent weakness due to the strong demand for its products from fast-food restaurants, which have added Beyond Meat and competitor products to their menus.
"(Quick-service restaurants) will help highlight international growth opportunities … and alt protein can address some of China's most challenging food production challenges," said analyst Mark Connelly, who believes increased competition will help increasing consumer awareness and expanding the total addressable market
In a recent note, Citi analyst Wendy Nicholson said that the problems that hit the group, including higher costs and weak food services revenues, "were mostly temporary". were, adding that revenue growth is likely to get back on track once the COVID pandemic wears off later in the year. Nicholson increased her stock rating to "buy" and raised her target price to $ 184 per share.
"We believe Beyond Meat will continue to grow rapidly in the coming years, but we also expect that the path of that growth trajectory may not be linear," Nicholson said.
"However, we believe the company's new partnerships with McDonald & # 39; s and YUM are a sign of these players' long-term commitment to the plant-based movement and Beyond Meat as a brand."
Bottom Line
Beyond Meat remains a target of short-sellers, especially after the disruption of the pandemic in the restaurant sector and in consumer buying habits. But after this weak stock price, it has become more acceptable to long-term investors who may be keen to add a quality growth stock to their portfolio.
