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Will Beyond Meat Stock Rally Back to $200?

The bearishness toward Beyond Meat (BYND), which is due to a continued slowdown in its food services business and the company’s weak third-quarter results, has significantly reduced its chances of rallying back to $200.

Beyond Meat, Inc. (BYND) is a manufacturer and seller of plant-based meat products in the United States and internationally. The company operates under the trademarks Beyond Meat, Beyond Burger, Beyond Beef, Beyond Sausage, and several others. It offers its products through grocery, convenience store, direct-to-consumer, restaurants, foodservice outlets, and schools.

The company continues to experience a meaningful slowdown in its food service business due to Covid-19 pandemic restrictions on foodservice operations. Compounding the still-uncertain course of the pandemic is customers’ reluctance to dine in crowded restaurants amid the current second wave of infections. We think this could prevent BYND’s sales from returning to pre-pandemic levels in the coming months.

While the stocks gained 87.7% over the past year to close yesterday’s trading session at $143.23, it does not appear well positioned to rally back to $200.

BYND has experienced the full brunt and unpredictability of COVID-19’s economic impact, which is evidenced by its poor revenue and earnings numbers. A bleak outlook and several other negative factors have led our proprietary rating system to rate BYND stock as “Neutral.”

Here’s how our proprietary POWR Ratings system evaluates BYND:

Trade Grade: D

BYND is currently trading lower than its 50-day moving average of $152.27, but higher than its 200-day moving average of $128.98, which does not indicate a promising trend. Moreover, BYND has declined 11% over the past three months, indicating short-term bearishness.

BYND’s international food services revenue has declined 65.1% year-over-year to $8.08 million in the third quarter ended September 30, 2020. Its gross profit declined 22.1% from its year-ago value to $25.53 million. The company reported a net loss of $19.30 million and an adjusted EBITDA loss of $4.30 million over this period.

On November 16, the company unveiled two new versions of its Beyond Burger (a plant-based burger that looks and cooks like beef), which it expects to launch nationwide in early 2021. These new iterations are designed to meet consumers’ growing demand for plant-based proteins.

BYND recently partnered with Pizza Hut to bring a plant-based meat pizza to market with the nationwide launch of new Beyond Pan Pizzas. This new launch could help BYND to raise the bar on game-changing product innovations and generate higher revenues.

Buy & Hold Grade: C

In terms of proximity to its 52-week high, which is a key factor that our Buy & Hold Grade considers, BYND is poorly positioned. The stock is currently trading 27.5% below its 52-week high of $197.50, which it hit on October 8. This can be attributed to the company’s declining food service channel sales due to the continued impact of COVID-19 on demand.

Peer Grade: D

BYND is currently ranked #14 of 27 stocks in the Agriculture group. Other popular stocks in this group are Evogene Ltd. (EVGN), Pacific Ethanol, Inc. (PEIX) and AGCO Corporation (AGCO).

EVGN and PEIX beat BYND,gaining 169.6% and 823.8% over the past year, respectively, while AGCO returned 29.1% over this period.

Industry Rank: B

The Agriculture group is ranked #51 of the 123 industries. The companies in this industry are some of the largest agricultural processors and food ingredient providers. They are engaged in services which procure, transport, store, process, and merchandise agricultural commodities and products.

Earlier this year, the COVID-19 pandemic forced the closure of facilities and disrupted production at numerous food processing plants across the nation. Though supply shortages were felt by consumers earlier on, the industry responded well, and the food supply chain stabilized quickly with the phased reopening of the economy. Moreover, the federal government’s Coronavirus Food Assistance Program and its CARES Act have specifically contributed to the industry’s fast recovery.

Overall POWR Rating: C (Neutral)

BYND is rated “Neutral” due to the challenges it is currently facing, as determined by the four components of our overall POWR Rating.

Bottom Line

In the near-term, BYND may not rally back to $200 because of operational challenges presented by the coronavirus shutdowns that have hampered restaurant sales. Also, the fact that plant-based-meat retail strategy is a relatively new concept, consumer demand may not surge significantly compared to real meat products.

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BYND shares were trading at $142.73 per share on Friday morning, down $0.50 (-0.35%). Year-to-date, BYND has gained 88.80%, versus a 16.21% rise in the benchmark S&P 500 index during the same period.

About the Author: Imon Ghosh

Imon is an investment analyst and journalist with an enthusiasm for financial research and writing. She began her career at Kantar IMRB, a leading market research and consumer consulting organization.


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