PreMarket Prep Stock Of The Day: Beyond Meat

Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.

For those who don't have the time to tune in live or listen to the podcast, Benzinga will highlight one stock that merits further discussion. This analysis is not a buy or sell recommendation.

On most occasions when a company reports quarterly earnings, they will have violent price action up and down in the corresponding trading sessions. The levels from the session are valuable tools to determine whether or not there will be follow through on the move or not.

Following its first-quarter earnings report, Beyond Meat Inc BYND jumped 26% from Tuesday's close ($100.16) all the way to $126.50 and ended the day at $126.21. On today's PreMarket Prep Show, the question was asked "will there be follow through on Wednesday's rally?" That question has made the issue the PreMarket Prep Stock Of The Day.

See Also: These Analysts Aren't Supporting Beyond Meat's Stock Surge

Weak Ahead Of Report And A Bounce

The issue was rebounding from its March 19 low ($48.18) and posted its high close for the rally on April 24 at $108.78. But a pair of catalysts submariend the issue on April 27. One positive catalyst -- that meat plants were halting operations -- instigated a rally off the open taking it to $116.43 in the next session.

The two negative catalysts were out before the open. The first one, a downgrade from UBS from Neutral to Sell and the price target being lowered from $90 tp $73. The other being KFC Partners announcing a deal with Cargil to test plant-based chicken at select stores in China.

The decline off that high finally found a bottom on May 4 at $88.51 and rebounded to end the session at $95.16. On the day ahead of the report, it added $5 to close at $100.16 as some investors were leaning long into the report.

Q1 Earnings Beat

After the close on Tuesday, the company announced an EPS beat of 36 cents along with a sales beat of $10.67 million. Bullish comments that the company continues to expect from food-at home consumer demand in its retail channel added to the upward momentum.

After a $10 higher open, it retreated only 26 cents to $110 and embarked on an all-day rally to end the session at $126.21.

How To Play It

The detailed explanation from the author of this article can be found at 1:04 mark of this Soundcloud clip.

Taking the stance, as one being long the issue and looking for follow through, the importance of Wednesday's high ($126.50) and close ($126.21) were noted as key technical levels. Also, the fact that the Feb. 20 high was $126.10 added further significance to that area.

Testing the waters, with offers in that entire area and above was suggested as potential exit strategy. At first, those sells did not look so good as the issue continued higher to $127.84 before sharply reversing course. As of 11:30 a.m. EST, the issue swooned to $117.12 and was ;back trading in the $120 handle.