Is Beyond Meat A Buy Amid Pepsi, McDonald’s Deals?

Since its begin over 10 years in the past, Beyond Meat (BYND) has emerged because the chief in plant-based meat options. The vegan meat firm’s product line can now be discovered in additional than 80 nations in 122,000 retail and meals service areas. After its May 2019 IPO launch, BYND inventory rocketed 859% to all-time highs just a few months later.


News of a giant distribution deal in January offered a short lived increase for Beyond inventory. But is BYND inventory a purchase now? It’s key to investigate the vegan meat firm’s elementary and technical image first.

BYND Stock Jumps On Upgrade

Shares of Beyond Meat jumped 10% on May 24 after a giant improve from Bernstein. Analyst Alexia Howard boosted her score for BYND inventory from Underperform to Outperform with a goal value of 130, up from 101.

The new value goal marks a 22% premium on Beyond’s closing value of 106.58 on May 21. But even with the improve bump, shares are nonetheless buying and selling virtually 50% under their 52-week excessive.

However, Howard sees Beyond Meat as a restoration play after a tough 2020 on account of pandemic closures. Her view is that BYND inventory will not be “a broken growth story.”

The reopening of eating places alongside the vaccine rollout is a constructive sign for Beyond Meat inventory. Though the corporate has been ramping up its retail enterprise, gross sales have not made up for misplaced income within the restaurant sector.

Beyond Meat Stock Earnings

BYND inventory fell after the corporate’s Q1 earnings report on May 6. The plant-based patty maker notched a lack of 42 cents per share on income of $108.2 million. Those outcomes underperformed Wall Street’s forecast lack of 27 cents a share on income of $114.35 million.

Beyond’s retail gross sales have been up, however these positive factors have been offset by drops in its U.S. meals service gross sales. The firm stated these traits have been comparable throughout worldwide markets. However, CEO Ethan Brown added on the May 6 earnings name that he expects a “slow and steady thaw” of these depressed gross sales numbers as Covid reopenings take impact.

“We are encouraged by the trends we saw in Q1 revenue,” he stated. “Retail net revenues led to our growth, increasing 45% year over year. And although food service net revenues were down 34% versus the prior-year period, this sector appears to be showing directional early signs of recovery from Covid-19.”

BYND inventory’s earnings come amid rising competitors within the plant-based meat market. Tyson Foods (TSN) introduced a brand new lineup of vegan meat merchandise simply days earlier than Beyond’s earnings. Brown says that BYND inventory’s continued funding in infrastructure and partnerships give the corporate a strategic edge.

“We are making a series of investments here in the U.S., in the EU, and in China to be in a position to serve customers and consumers alike,” Brown stated. He added that the corporate’s concentrate on “three key levers of taste, health, and cost” will allow a runway for progress on the subject of mass adoption.

Key Partnerships Lift BYND Stock

BYND inventory is in a downtrend, nevertheless it’s seen non permanent boosts alongside partnership bulletins. Shares soared practically 20% on Jan. 26 after news of a partnership with PepsiCo (PEP) to provide wholesome, protein-filled snacks.

The deal is Beyond Meat’s doubtlessly most far-reaching partnership to this point. It would give the corporate entry to new distribution channels.

The Pepsi settlement is the most recent marquee partnership for Beyond Meat. The vegan meat maker introduced a cope with Yum Brands‘ (YUM) Taco Bell on Jan. 14. Announcements of each these partnerships helped BYND inventory surge 42% within the month of January.

Fast-food large McDonald’s (MCD) introduced it will start providing McPlant menu gadgets made with Beyond merchandise final November. The growth of McDonald’s vegetarian menu choices comes after a take a look at run in Canada with Beyond Meat merchandise.

Beyond Meat’s growth plans embody different retail areas as properly. CEO Brown introduced on the Nov. 9 earnings name that Beyond Burger could be obtainable at 7,000 CVS (CVS) areas nationwide in January 2021.

The vegan meat firm additionally expanded its meals service partnerships within the U.S. to 650 Wawa comfort shops. Beyond Meat plans on persevering with trials of plant-based meat merchandise at choose KFC and Dunkin’ Donuts areas, owned by guardian corporations Yum Brands and Dunkin’ Brands (DNKN), respectively.

Beyond Meat Expands To China

Additionally, Beyond Meat stated on Sept. eight it is constructing manufacturing services close to Shanghai, China. This makes Beyond the primary overseas vegan meat firm to arrange operations within the nation.

Beyond Meat introduced the grand opening of its first manufacturing plant in China on April 7.

The Shanghai-based manufacturing facility is vital to rising Beyond Meat’s presence within the Chinese market. BYND inventory views the area as a big a part of the corporate’s long-term progress technique.

The opening of the China-based manufacturing facility comes after the launch of a brand new e-commerce web site for Beyond Meat. The platform permits shoppers to buy vegan meat merchandise immediately from the corporate.

Beyond Meat can also be collaborating with Yum China (YUMC)-owned eating places — together with KFC, Pizza Hut and Taco Bell. The plant-based-burger maker additionally has netted key partnerships with Chinese e-commerce large Alibaba‘s (BABA) Freshippo grocery shops.

“In Asia, our goal of establishing a production footprint before the end of 2020 remains on track,” Brown stated. “We believe the magnitude of the opportunity in Asia merits significant investments, and we will continue to proceed with a sense of urgency appropriate for the challenge and opportunity alike.”

Growth Of Vegan Meat Market

Though plant-based meat substitute is a comparatively new business, Barclays analysts final May projected sales of vegan meat could hit $140 billion within the subsequent 10 years.

Beyond Meat’s most notable rival is privately owned Impossible Foods. In addition to profitable restaurant partnerships that embody Burger King (QSR), the Northern California-based firm additionally has aggressively expanded its personal retail footprint throughout the pandemic.

Impossible Foods has grown its grocery retailer roster, which incorporates offers with Walmart and Albertsons (ACI).

The nation’s largest meat producer, Tyson Foods, additionally entered the vegan meat area in 2019. Tyson sells plant-based meat within the type of nuggets and blended protein options by way of its Raised & Rooted label in additional than 7,000 shops throughout the U.S.

And in May, Tyson debuted new plant-based burgers, sausages and imitation floor meat in U.S. grocery shops.

BYND Stock Fundamental Analysis

To decide whether or not BYND inventory is a purchase now, elementary and technical evaluation is vital.

The IBD Stock Checkup tool exhibits that BYND inventory has an IBD Composite Rating of eight out of a best-possible 99. The score measures a inventory primarily based on a very powerful elementary and technical stock-picking standards. IBD analysis exhibits a few of the biggest inventory winners of all time usually have a Composite Rating of at the very least 95 close to the beginning of huge runs.

The Composite Rating appears to be like at earnings and gross sales progress, revenue margins, return on fairness and relative inventory value efficiency, amongst different metrics.

BYND inventory has an EPS Rating of seven out of 99. The EPS score compares a inventory’s quarterly and annual earnings-per-share progress with that of all different shares.

The plant-based meat producer ranks No. eight amongst its meals retail friends when it comes to Composite Rating. Pilgrim’s Pride (PPC) holds the highest spot in IBD’s Food-Meat Products business group. Industrias Bachoco (IBA) is No. 2. Tyson Foods (TSN) is ranked third.

This group at the moment is ranked a weak No. 178 out of the 197 business teams IBD tracks. Investors ought to concentrate on shares within the high quartile of IBD’s teams.

BYND Stock Technical Analysis

BYND inventory made its Nasdaq debut in May 2019 at 25. Shares of Beyond Meat rapidly made a powerful transfer within the following three months.

Beyond Meat stock hit an all-time excessive of 239.71 in July 2019. But then BYND started declining virtually as rapidly because it climbed.

Fast ahead to 2021, and Beyond Meat inventory tried to rebound on information of partnerships with Taco Bell and PepsiCo. Shares powered above the 150 value degree on Jan. 25, clearing a brief, handle-like consolidation. This transfer may have been considered as an early entry level for aggressive buyers.

But the 200 value degree was a resistance space for the inventory. Though shares of Beyond Meat gapped up on the PepsiCo partnership, the inventory had a weak first five-minute bar that day, and closed close to the low. That’s weak motion.

Shares rapidly stuffed the hole, which is one other adverse signal. When a inventory gaps up, it is splendid to see it maintain that acquire. That’s a sign of energy and institutional help.

After plunging all the way in which to the 100 degree within the following months, Beyond Meat inventory jumped 10% on May 24 following an improve from analysts at Bernstein. This robust transfer despatched BYND inventory above its downward sloping 21-day line for the primary time in virtually a month.

Though BYND inventory is making an attempt to maneuver off lows, shares are nonetheless properly under their 10-week line and 40-week line. At practically 50% under 52-week highs, BYND inventory wants time to development larger and kind a brand new base.

Beyond Meat Stock: Is It A Buy Right Now?

The long-term outlook for plant-based meat appears compelling, and Beyond Meat is seeing a rebound within the food-service market. Forward-looking earnings estimates are encouraging, however the chart’s technical image stays poor.

Bottom line: BYND inventory will not be a purchase proper now. Though the May 24 gap-up to retake the 21-day line is a constructive growth, BYND inventory continues to be buying and selling under its 10-week and 40-week averages.

Investors can preserve a watch out for the event of a brand new correct entry. But given the technical injury to the chart, that would take some time.

To discover the most effective shares to purchase and watch, take a look at IBD’s Stock Lists web page. More inventory concepts could be discovered on our Leaderboard and MarketSmith platforms.

Follow Alexis Garcia on Twitter at @IBD_Alexis.


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