Down 60% in Six Months, Can Beyond Meat’s Stock See A Rebound?

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BYND: Beyond Meat logo
BYND
Beyond Meat

After a 60% decline over the last six months, at the current price of around $43 per share, we believe Beyond Meat stock (NASDAQ: BYND), a plant-based meat alternative – could see gains. BYND stock has declined from around $107 to $43 in the last six months, largely underperforming the broader indices, with the S&P growing about 2% over the same period. The company attracted a lot of attention when it first launched meat-alternative products like the Impossible Burger and Beyond Burger, but recent results have been disappointing in the last six months. In fact, revenue declined slightly in BYND’s recent fourth quarter, and the company is still significantly unprofitable. However, BYND expects demand trends to pick up as it launches new products in the market later this year. In addition, the company is diversifying and pushing deeper into the plant-based chicken segment with the distribution of its Beyond Chicken Tender to 8,000 new grocery and big-box retailers. The bigger aim is to build on its success with Beyond Meat burger patties.

Beyond Meat’s Q4 report saw slumping demand at the supermarket and big-box retailers for its plant-based burgers and chicken products. Its revenue declined 1% year-over-year to $100.7 million, due to a 20% fall in U.S. retail sales. The company’s gross margin plunged 1080 basis points on a GAAP basis to 14% (mostly due to a one-time write-off). That said, the plant-based meat company seems to be moving forward with its growth spending. Its operating expenses grew 2x to $92 million, largely due to a big jump in SG&A spending. Consequently, the company’s net loss swelled to $80 million or $1.27 per share. It should be noted that the company reported $733 million in cash at the end of 2021, so it can still afford a couple of more quarters like this one.

We have updated our model following the Q4 release. We forecast Beyond Meat’s Revenues to be $630 million for the next fiscal year 2022, up 36% y-o-y. Looking at the bottom line, we now forecast revenue per share (RPS) estimate to come in at $9.97. Given the changes to our revenues and RPS forecast, we have revised our Beyond Meat’s Valuation to $46 per share, based on a $9.97 expected RPS and a 4.6x P/S multiple for the fiscal year 2022 – almost 7% higher than the current market price. That said, the company’s stock appears cheap at the current price.

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Beyond Meat’s management believes that their spending rates will subside substantially in 2022, and they can leverage the investments made in 2021. The company expects first-quarter revenue to rise 20% to 23% y-o-y. Growth in revenues should help the company improve its bottom line, as well. But, whether or not the company will be able to achieve these numbers depends on how shoppers respond to the new product launches which are expected to hit the market in coming quarters. The company was focused on fast-food partnerships in 2021 over launching new retail products. So, a strategy reversal here could be a big challenge in the near term.

Here you’ll find our previous coverage of BYND stock where you can track our view over time.

While BYND stock looks poised for more gains in the future, it is helpful to see how its peers stack up. Check out how Beyond Meat’s Peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

 Returns Apr 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 BYND Return -7% -31% -40%
 S&P 500 Return -2% -7% 99%
 Trefis Multi-Strategy Portfolio 0% -7% 264%

[1] Month-to-date and year-to-date as of 4/14/2022
[2] Cumulative total returns since the end of 2016

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