Beyond Meat is promising with risks: analysts
Beyond Meat Inc. has massive growth potential, but this may already be reflected in a stock that has more than tripled since going public earlier this month, according to analysts who started coverage on company.
The firms were unanimously bullish on plant-based protein products, and see Beyond as occupying a central place in this rapidly growing food category. However, the stock’s performance has resulted in a valuation that is widely seen as elevated, and analysts also see potential risks from competition.
While JPMorgan was emphatic in its praise — seeing an “extraordinary” opportunity — a more typical analysis came from Jefferies, which noted that expectations were “very high,” and said much would have to go right for shares to continue receiving support.
The stock has risen more than 240 per cent since it went public earlier this month. Shares gained as much as 9.3 per cent on Tuesday after the El Segundo, Calif.-based company announced it is opening its first production facility outside the U.S.
Its is partnering with Dutch meat producer Zandbergen World’s Finest Meat.
Here’s what analysts are saying about the company:
JPMorgan, Ken Goldman “We view Beyond’s growth opportunity as extraordinary,” given the potential of the plant-based meat category.
“Strongly favourable” on the stock. Overweight rating, Streethigh US$97 price target.
Goldman Sachs, Adam Samuelson
The company is a “key early-mover” in its rapidly growing sector. It “is achieving notable scale on manufacturing, brand awareness, product innovation, and distribution.”
However, its sales momentum is “already more-than-fairly discounted,” and there is “considerable risk” to its longer-term ability to expand its production supply and remain differentiated from competitors.
Neutral rating, US$67 price target.
BofAML, Bryan Spillane “Optimistic about the prospects for BYND given the size of the addressable market, product quality, and positioning against consumer interests in health & wellness and sustainability.”
Hold rating, US$85 target. Sees potential risks from competition and its supply chain being unable to handle rising demand.
Jefferies, Kevin Grundy The company is positioned well “for rapid and sustainable growth,” given its strong leadership and favourable trends for the plantbased protein category.
However, “expectations are very high and likely require bull case developments” for the stock to be supported.
Hold rating, US$85 price target.