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Don't Count Beyond Meat (NASDAQ:BYND) Out Just Yet

Tuesday, November 10, 2020 | Steve Anderson
Dont Count Beyond Meat (NASDAQ:BYND) Out Just Yet

Things were looking great for Beyond Meat (NASDAQ:BYND) for a while there, weren't they? Circumstances were lining up wonderfully, corporate partnerships were being established, and the company's plant-based meat product was looking like it could make some real headway in a population enamored with actual cow-based meat products. Yet with the latest quarter, Beyond Meat took a doozy of a hit. However, this hit may mask an opportunity already in progress.

Disappointing Numbers Hit Hard

At one point in pre-market trading, Beyond Meat had actually lost almost a quarter of its total value. A combination of factors hit the company hard, including sales that didn't measure up to expectations, as well as a loss on the company's bottom line. The company brought in $94.4 million in revenues, but that was well below the expected revenue of $132.8 million. Moreover, these numbers weren't enough to prevent a loss, as even the expected revenue figure would have generated a per-share loss of $0.05. The company's actual, much larger, loss ended up with the company down $0.28 per share.

Interestingly enough, where COVID-19 actually gave Beyond Meat a hand in the past, it now hurt the company. Back in March and April, when the disease was getting started and the slaughterhouses were taking a hit, Beyond Meat looked like an attractive replacement good to many potential customers. And with good reason; it looked like meat, people said it tasted like meat, and it was available, so why not try a package? Fast forward seven months, meanwhile, and the slaughterhouses are “essential businesses” protected by federal law, real meat is cheap and plentiful once more, and consumers aren't stockpiling quite so much these days. Plus, restaurant dining is still down, which is hurting the company's sales to non-consumers.

Moreover, the move away from restaurants hit the company in other ways; the company had to spend $700,000, reports note, on changing packaging around for items to be sold in grocery stores. Another $1.1 million went to write-offs on foodservice products that couldn't be sold.

Competitive Puzzlement

Meanwhile, competition started to fire up, and on levels that hit hard at first until their true nature was understood. One of the biggest contributors to losses for the company, besides the numbers, was the arrival of McDonald's (NYSE:MCD) McPlant offering. The notion that McDonald's had developed its own plant-based meat product, and eliminated the need to partner with anybody on providing it to stores, was catastrophic. However, the revelation that Beyond Meat actually assisted McDonald's in developing McPlant that came out later meant a sigh of relief and some partial recovery.

Better yet, new expansion efforts came into play that should help going forward; earlier today, Pizza Hut (NYSE:YUM) announced that it would bring Beyond Meat options to its lineup. CVS (NYSE:CVS) also joined in the fray, and Beyond Meat would be available for sale therein as well. Two factories near Shanghai would help the company roll out harder into the Chinese market, a point that certainly can't hurt given what's been going on in Chinese agriculture of late.

The Market is Skeptical, But Does That Mask Opportunity?

As for the analysts, the picture isn't terrible, but not that great. The current consensus calls for a hold, with eight “sell” ratings, eight “hold” ratings, and five “buy” ratings, a proportion that's held true for the last 30 days. The price target has slipped a bit as well in that time, down from $119.19 30 days ago to $111.95 today. While Wells Fargo upped its price target on the company earlier today, it upped it from $72 to $77, which is still well under the $121.55 share price it holds as of this writing.

The numbers for the last quarter were not great. There's no two ways about that one. However, we can also see how the impact of the third quarter is likely to be temporary. The market conditions that gave Beyond Meat its gains in the second quarter are out of the picture, at least for now, but the gains in corporate partnerships likely can't hurt. If Beyond Meat's help with the McPlant gives it a percentage of sales, that's an exciting new potential revenue stream in the company's favor.

\With a range of companies developing plant-based meat products, and Beyond Meat working hard to be the leader among them, it's a safe bet that the recent losses seen are recoverable. With Beyond Meat suddenly losing a hefty chunk of its share price, this could represent a real buying opportunity for those who think Beyond Meat can recover on the strength of new partnerships and excellent name recognition.

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Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Beyond Meat (BYND)1.3$101.48-3.3%N/A-225.51Hold$122.61
McDonald's (MCD)2.6$230.68+1.2%2.24%35.22Buy$243.21
Yum! Brands (YUM)2.2$118.67+1.3%1.69%35.64Hold$118.50
CVS Health (CVS)2.3$84.40+1.2%2.37%13.95Buy$92.14
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