Beyond Meat Analyst Sees More Downside Ahead

Shares of imitation meat maker Beyond Meat Inc BYND were regaining some ground Thursday after falling more than 10% this week and even more over the month.

Credit Suisse lowered its price target on the stock and said increased liquidity and competition are likely to keep the slide going.

The Analyst

Robert Moskow maintained a Neutral rating on Beyond Meat and lowered the target price from $174 to $135.

The Thesis

The decision to lower the price target and other recent negativity around Beyond Meat runs contrary to the short-term run of news for the company, Moskow said in a Wednesday note. (See his track record here.)

For now, Beyond Meat management is expecting a positive bump and is likely to raise its sales guidance upward by about $20 million to reflect strong sales trends and the decision by Dunkin Brands Group Inc DNKN’s Dunkin’ Donuts to accelerate its national launch of breakfast sandwiches using Beyond Meat, the analyst said. 

But while the Dunkin’ decision will likely offset a reported move by another breakfast-focused chain, Restaurant Brands International Inc QSR’s Tim Hortons, to take Beyond Meat off the menu in part of Canada, other issues could push the shares lower, he said.

Increased liquidity in the stock following the expiration of the six-month lock-up period Oct. 29 and more competition from new entries in the plant-based “meat” category present a downside, and likely will push the stock down, Moskow said. 

While Credit Suisse raised earnings and sales estimates to the consensus level for 2019, the firm left 2020 estimates unchanged.

Long-Term: Beyond Burger Beefing Up Fast Food Presence

McDonald's Corp MCD restaurants have been testing Beyond Meat in Canada, and Moskow said he expects it it to be just the first step of a “much wider rollout," with a projection that Beyond will be in all of the U.S. and half of its international restaurants by 2030.

Restaurant Brands International’s Burger King chain beat McDonald's to the imitation meat burger, which some blamed in part for McDonalds’ earnings miss this week.

Other Impacts On Sentiment

Beyond Meat shares have been hit with a couple of negative items in the news in recent days, including a report that competitor Impossible Foods will begin selling its plant-based burgers in Europe, and a report in German publication Handelsblatt that mineral oil constituents were found in a test of Beyond Meat burgers there.

Beyond Meat shares were trading up 4.76% at $102.56 at the time of publication. The stock was trading at $115 on Friday, and it has dropped considerably in value since late September, when shares were trading at the $150 level. 

Beyond Meat reports earnings Oct. 28.

Related Links:

Wells Fargo Is Cautious On Beyond Meat's Stock As Competition Rises

5 Plant-Based Meat Makers That Could Give Beyond Meat A Run For Its Money

Photo courtesy of Beyond Meat.