BYND Stock – Bear of the Day: Beyond Meat, Inc. (BYND)
Beyond Meat (BYND) stock has been on a wild ride over the last six months, which extends its rollercoaster journey since the plant-based meat firm went public in May 2019. BYND fell well short of quarterly earnings estimates in the last two quarters and its consensus price target from analysts sits fell below where the stock trades heading into the release of its fourth quarter 2020 financial results that are due out February 25.
The Simple Beyond Pitch
Founded over a decade ago, Beyond Meat sells so-called plant-based meats. The company and rivals such as privately held Impossible Foods aim to mimic the taste and consistency of real meat rivals, unlike veggie burgers and other offerings that have been around for longer. BYND has expanded its portfolio to include everything from multiple burger patties to sausages and more.
The company’s diversification efforts include more affordable options and larger quantity packaging. Beyond Meat also boasts that its plant-based meats are healthier than traditional meat, but these claims have been disputed.
Therefore, its long-term success might hinge on its ability to sell consumers and Wall Street on its larger goals of shifting from animal to plant-based meat, to counteract what it calls “four growing issues attributed to livestock production: human health, climate change, constraints on natural resources and animal welfare.”
The company also announced at the end of January “a joint venture to develop, produce and market innovative snack and beverage products made from plant-based protein” with PepsiCo (PEP).
Some of the Questions
Clearly, demand is growing for plant-based meats. But growth has presented challenges for Beyond and established names in the food industry like Hormel Foods (HRL), MorningStar Farms, Kraft Heinz (KHC), and others have entered the space. And in early Feb., Impossible Foods said it is set to cut the prices of its faux meat by 20% at U.S. grocery stores, as part of a continued push to lower its prices.
Along with a crowded market and possible pricing worries, some analysts, including at J.P. Morgan have grown more concerned about Beyond Meat’s near-term prospects given pandemic-based conditions. And BYND posted an adjusted loss of -$0.28 a share in the third quarter, which came in far below the Zacks consensus of +$0.03.
Looking ahead, Zacks estimates call for BYND to sink from an adjusted loss of -$0.01 a share to -$0.14 in the fourth quarter on just 6% stronger sales. This would mark an improvement from Q3’s 3% revenue growth. Still, both represent dramatic slowdowns from Q2’s 69%, Q1’s 141%, and the fourth quarter of 2019’s 213%.
Beyond Meat has been hurt by a huge downturn in its foodservice segment. That said, its full-year revenue is projected to climb 37% in 2020 to reach $409 million, with FY21 expected to come in 53% higher. But these both mark major slowdowns from 2019’s 240% top-line growth.
It is also expected to post a much larger full-year loss of -$0.40 a share in 2020. Luckily, it is projected to bounce all the way back to +$0.08 in 2021.
Beyond Meat’s overall earnings revisions have trended slightly in the wrong direction. Plus, its Most Accurate Estimates, which are the most recent estimates, come in far below BYND’s consensus estimates. This could set up for a possibly disappointing showing.
BYND’s earnings revisions help it land a Zacks Rank #5 (Strong Sell) at the moment, alongside an “F” grade for Value and “Ds” for Growth and Momentum. On top of that, its current Target price Consensus of $122 a share comes in 25% below the $167 per share it traded at on the close of regular trading Thursday.
All that said, investors likely want to wait and evaluate Beyond Meat’s actual Q4 results and its outlook before making any decisions.
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