Should Investors Buy The Dip In Beyond Meat? 3 Analysts Weigh In

Plant-based food maker Beyond Meat Inc BYND reported second-quarter results as sales came in better than expected but showed a sequential slowdown in growth.

Bernstein analyst Alexia Howard maintains a Market Perform rating on Beyond Meat's stock with a price target lifted from $133 to $136.

Credit Suisse analyst Robert Moskow maintains a Neutral rating with a $142 price target.

BofA Securities analyst Bryan Spillane maintains an Underperform rating with a $81 price target.

Bernstein: Growth Issues

Beyond Meat reported revenue of $113.3 million in the second quarter that was 14.4% better than what the Street expected, Howard said. While this represents a year-over-year growth rate of 69%, it also marks a sequential slowdown from last quarter's growth of 141%.

"The sequential slowdown may be disappointing to retail investors," the analyst wrote in a note.

In addition, adjusted gross margin of 34.9% was 129 basis points better than expected but also marks a decline from last quarter's 38.8%. Management was active in investing in new and limited-time value packs meant to narrow the price gap between its plant-based products and traditional beef prices.

Credit Suisse: 'Impressive' Execution, Weaker Results

Beyond Meat's management deserves credit for its "impressive" execution amid the COVID-19 pandemic, Moskow wrote in a note. But the quality of Beyond's results were weaker than expected, especially within the U.S. Foodservice channel as sales were down 59%.

Management attributed the decline to a large number of small and independent restaurants that are more impacted by the pandemic. While this may be the case, there is also reason to believe that consumers were actively shifting to lower-priced options on the menus instead of pricier plant-food items.

Meanwhile, U.S. retail sales growth slowed down from 170% during the second quarter to 60% to 70% over the past six weeks. As such, Moskow said it's now less clear if recent initiatives in packaging and product lines will be enough to emerge as a net beneficiary.

BofA: Higher Costs An Issue

Beyond Meat reported overall mixed results as retail sales were better than expected but were offset by higher costs, Spillane said. Looking forward, the company is likely to continue investing in growth opportunities in the U.S. and international retail space but foodservice partnerships and launches will be put on pause.

The foodservice segment "remains a drag" on the company and the unit should show a slow recovery.

"In our view this will weigh on the stock as foodservice partnerships and new launches have been put on pause with no clear timing given the uncertainty around COVID-19," the analyst wrote.

BYND Price Action: Shares of Beyond Meat were trading lower by 4.4% at $135.89.

Related Links:

Why Oppenheimer's Sidelined On Beyond Meat Ahead Of The Q2 Print

Analyst: Beyond Meat's Stock Has Plenty Of Juice Left