Growth Investing: Is Beyond Meat A Buy After The Stock’s 30% Plunge? |

Shares of former market darling, veggie burger-maker Beyond Meat (NASDAQ:) grew to become risky throughout pandemic buying and selling. The excessive strikes on this plant-based meat producer point out that buyers stay unsure about its future progress and contemplate the inventory overvalued. 

The newest pullback, which despatched shares 30% decrease over the previous two months, began after the California-based firm missed analysts’ gross sales forecasts in January because the COVID-19 pandemic continues to harm its gross sales to eating places. 

Beyond Meat inventory closed Wednesday at $135.25, sharply decrease from its January excessive of $203.44 and nearly 50% beneath its all-time excessive degree of $234.90 reached in the summertime of 2019. Sales to eating places dropped to about $23 million within the final quarter of 2020, from about $60 million within the interval a yr in the past.

Beyond Meat Weekly Chart.

Despite the pandemic setback, we proceed to consider Beyond Meat is a good meals inventory to personal. Its current weak point is a bump within the firm’s long-term progress potential. BYND’s newest partnerships and growth plans validate this bullish case.

Beyond Meat that it’s going to open a producing facility in China, its first exterior the U.S., to provide and distribute its plant-based merchandise, together with Beyond Pork, created particularly for the Chinese market.

“The opening of our dedicated plant-based meat facility in China marks a significant milestone in Beyond Meat’s ability to effectively compete in one of the world’s largest meat markets,” mentioned Ethan Brown, CEO and founding father of Beyond Meat.

In January, Beyond Meat finalized its agreements with McDonald’s (NYSE:) and Yum! Brands (NYSE:)—two of the most important fast-food corporations on the earth. The three-year cope with McDonald’s makes Beyond Meat the chain’s “preferred supplier” for the McPlant patty. Beyond Meat and McDonald’s may also discover growing different plant-based menu objects, together with different rooster, pork and eggs.

Competition Is Better

In addition to those partnerships, final month, BYND started promoting meatless scorching Italian sausage at 400 Walmart (NYSE:) places throughout the U.S. The firm, which already sells a few of its merchandise at 2,400 of the retailer’s places, may also increase distribution of its cookout-themed worth pack to 500 of Walmart shops.

Analysts at Stephens consider BYND is an efficient purchase after its current weak point, because of robust demand for its merchandise from quick-service eating places, which have been including Beyond Meat merchandise, in addition to rivals’ merchandise, to their menus.

“(Quick service restaurants) will help highlight the international growth opportunity…and alt-protein can address some of China’s most-challenging food production issues,” mentioned analyst Mark Connelly, who believes elevated competitors will show useful in rising shopper consciousness and increasing the overall addressable market.  

In a current observe, Citi analyst Wendy Nicholson mentioned the problems that hit the group’s , together with greater prices and weak meals companies revenues, had been “mostly temporary,” including that topline gross sales progress is more likely to get again on monitor as soon as the COVID pandemic recedes later within the yr. Nicholson upgraded her ranking on the inventory to “buy” and boosted her value goal to $184 per share.

“We believe Beyond Meat will continue to grow quickly over the next few years, but we also expect that the path of that growth trajectory may not be linear,” Nicholson mentioned.
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“However, we do consider the corporate’s new partnerships with McDonald’s and YUM sign a longer-term dedication by these gamers to the plant-based motion and Beyond Meat as a model.”

Bottom Line

Beyond Meat continues to stay a goal of short-sellers, particularly after the disruption the pandemic has brought about within the restaurant business and in shopper shopping for patterns. But after this weak point within the share value, it has develop into extra acceptable for long-term buyers who could be eager so as to add a top quality progress inventory to their portfolio.

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