Oppenheimer Sees 'Difficult' Near-Term Setup For Beyond Meat

Plant-based food maker Beyond Meat Inc BYND boasts a favorable brand backed by a strong product assortment, but growing competition and valuation concerns should keep investors on the sidelines, according to Oppenheimer.

The Analyst

Oppenheimer analyst Rupesh Parikh initiated coverage of Beyond Meat's stock with a Perform rating.

The Thesis

Beyond Meat is positioned well to address growing demand for plant-based food alternatives, Parikh said in a note. The company has a path to sustain a double-digit sales growth rate over the coming years from a combination of industry-wide momentum and company specific innovation, new products, additional distribution to retailers and foodservice companies, and through international expansion.

Parikh said the company is also taking advantage of its first-mover status which afforded it a head start in the retail and foodservice space. However, competitors can catch up over time, especially from bigger food players who can hinder Beyond Meat's growth rates.

Shares of Beyond Meat lost all momentum and fell from its peak of nearly $240 in July to less than $80. Even after the pullback, Beyond Meat's stock looks "fully valued" at 7.6 times estimated 2021 sales.

Bottom line, the near-term setup for Beyond Meat is "difficult," especially ahead of potential selling pressure from the lockup period. Nevertheless, the research firm said it will be "closely watching" the company moving forward.

Price Action

Beyond Meat's stock traded lower by 3.4% to $76.53 at time of publication.

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Photo courtesy of Beyond Meat.