Beyond Meat Analysts Debate If The Stock Now Has Big Opportunity Or Major Headwinds

Plant-based food maker Beyond Meat Inc BYND reported third-quarter earnings that notably fell short of expectations and sparked a debate among analysts.

The Analysts: CFRA analyst Arun Sundaram maintains a Sell rating on Beyond Meat's stock with a price target lowered from $100 to $80.

Piper Sandler analyst Michael Lavery upgraded Beyond Meat from Neutral to Overweight with a price target lowered from $178 to $144.

BofA Securities analyst Bryan Spillane maintains an Underperform rating on Beyond Meat with an $81 price target.

A Quarter To Forget: Beyond Meat reported one of those quarters the company "will want to forget" as an EPS loss of 31 cents fell "well short" of the consensus estimate of five cents and sales missed estimates by 29%, Sundaram wrote in a note.

The poor results were a result of retail demand moderating while foodservice and sales to restaurants have yet to recover. Expectations for the fourth quarter could be a repeat of the third quarter as COVID-19 cases continue to rise and competition is "fiercer."

Related Link: McDonald's CEO Talks Plant-Based Burger

'Attractive' Opportunity: Beyond Meat's stock sell-off creates an "attractive" opportunity for an early leader in a market estimated to grow to $6 billion to $8 billion by 2025, Lavery wrote in the note. Most notably, Beyond Meat faces a big opportunity as a co-creator of McDonald's Corp's MCD new plant-based lineup.

Beyond will benefit financially even if McDonald's chooses not to include the company in any future branding, the analyst wrote. Specifically, Beyond faces a $100 million opportunity in the U.S. and at least $150 million in global markets.

Beyond's third-quarter report was impacted by the timing of retail shipment and continued pressure in the restaurant and foodservice category. However, investors should be buyers of the dip as it creates a more favorable risk to reward profile.

Unfavorable Positioning: Beyond Meat is "planting seeds" to support long-term growth although new initiatives and partnerships in the foodservice and restaurant category remain uncertain, Spillane wrote in a note. Some of the areas of focus include promotions in the retail and foodservice channels, new product launches like Beyond Meat 3.0 and financial gains from the McPlant product with McDonald's.

Despite a longer-term opportunity, Beyond's near-term exposure to the foodservice sector (51% of 2019 sales) and a premium valuation at 12 times 2021 EV/Sales suggests the stock will underperform other food and beverage peers.

BYND Price Action: Shares of Beyond Meat were trading lower by around 20% at $120.76.