Beyond Meat, Inc. (NASDAQ: BYND), which makes a variety of plant-based meat products, had an incredibly successful IPO in 2019. On May 1, 2019, Beyond Meat’s initial offering was priced at $25.00. By July, BYND hit an all-time high of just under $240 per share.
Still, while the company has been met with extreme optimism from some investors, others grow more concerned with increasing competition, which resulted in a massive drop from the stock’s peak. After hitting its high in July, Beyond Meat would go on to close out 2019 at $75.60.
Analysts Say Beyond Meat is Just Too Pricey
Analysts are starting to take part in the skepticism regarding Beyond Meat’s ability to succeed in-spite of increasing competition from larger food companies and other meatless startups, such as Impossible Foods.
Earlier this month, Bernstein analyst Alexia Howard downgraded Beyond Meat from outperform to market perform. Howard maintained a $106 price target for the stock.
The Bernstein analyst pointed out that Beyond’s near-term potential for sales growth is “largely priced in,” which makes the stock less attractive from a risk-to-reward perspective. Beyond Meat also faces concerns regarding whether or not it can produce enough food to meet high demand.
On the positive side, the analyst indicated that Beyond Meat has significant opportunity for growth in Europe, which would greatly increase its market. However, Bernstein’s price target of $106 implies a 13.4% downside from its current price of $122.40.
Beyond Meat Continues to Face Extreme Competition
One of the biggest concerns surrounding BYND is the growing competition that the company faces. Not only does the company face competition from the likes of other plant-based companies like Impossible Foods, but a number of major food-industry companies are making their way into the plant-based meat industry.
This includes industry giants like Tyson Foods, Inc. (NYSE: TSN), Kellogg Company (NYSE: K), Nestle, and The Kroger Co.’s (NYSE: KR) new line of faux meat products. Bay Area-based Memphis Meats, recently announced raising $161 million in a Series B funding round, as the startup aims to make a formidable push into the meatless protein market. As more competitors enter the market, Beyond Meat is likely to lose some of its pricing power.
In addition to market saturation issues, demand seems to be cooling off from the summer 2019 craze. Even Burger King just announced that it is slashing the price of its Impossible Whopper due to slow sales.
Carrols Restaurant Group, Inc. (NASDAQ: TAST), the U.S.’s largest Burger King franchisee, recently noted that sales of the Impossible Whopper have dropped to an average of 28 units daily per store. This was down from a previous daily average per store of 32 Impossible Whoppers.
While BYND is off to a great start in 2020, much of the surge has been due to the overall market melt-up and the Snoop Dogg/Dunkin’ plant-based sandwich promotion. All eyes will be on Beyond Meats on January 27th, as we wait latest earnings results after the market close.
BYND: Other News
Beyond Meat has taken a number of steps in an effort to grow its market dominance and assuage investor concerns. Recently, it was announced that McDonald’s Corporation (NYSE: MCD) is expanding the testing of its Beyond Meat burger in Canada.
Furthermore, in order to meet increasing demand, the company announced a supply agreement with Roquette, which will increase the amount of pea protein that is supplied to Beyond Meat.
Regarding this agreement, Ethan Brown, Beyond Meat’s Founder & CEO stated, “This latest contract with Roquette reflects Beyond Meat’s commitment to further scaling the plant protein supply chain as global demand for our products continues to rise.
In the company’s October earnings report, it raised its guidance for the full fiscal year and now expects to reach net revenue in the range of $265 million to $275 million. However, Beyond Meat will need to continue focusing on partnership expansion, as well as research & development (R&D), if they are to stay ahead of the highly-saturated plant-based meat market.
Article By: Connor Beam