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stock is known for its volatility, but lately it’s been on a steady path down. However, there is still reason to believe in the bull case for the plant-based protein maker, according to Citigroup.
Analyst Wendy Nicholson reiterated a Buy rating and $133 price target on Beyond Meat’s shares (ticker: BYND) Wednesday. Beyond Meat was up 0.2% to $133.78 in recent trading. The shares are up 6.3% year to date and have risen by nearly 33% in the past 12 months.
The shares have fallen about 10% since the analyst’s March upgrade of the stock, largely because of “the evolving competitive dynamic in the plant-based meat category.” More private competitors are entering the space, and some of them may have flexibility to lower their prices more aggressively than Beyond Meat, as companies push toward price parity with traditional meat. Others investors are worried that margin pressure shows no sign of abating, and that the company’s high-profile partnerships with companies from McDonald’s (MCD) to Yum! Brands (YUM) might not offer much growth.
Nicholson is keeping the faith. “Beyond Meat is a strong player in an attractive and growing category,” she writes Wednesday. “Despite the difficult comparisons (which we believe are well understood by investors), difficult competitive dynamics (which we also believe are well understood by investors), we still think there is a long runway [of] strong growth ahead for this company.”
She argues that the company should benefit from easy year-over-year comparisons in its food service channel, as restaurant sales suffered in the early days of the Covid-19 pandemic. Retail sales face more difficult comparisons, given the surge of grocery sales, but she still expects this division to notch 30% growth. The company’s international operations could be even stronger than those in the U.S. in 2021, she writes.
While her estimates are a little bit more conservative than consensus for the first half of the year, Nicholson is more confident about the back half. “We see room for the company to start to benefit just a bit from the early, early days of its newly minted partnerships …and continue to roll out newer and better tasting products while benefiting U.S. food service recovery.”
Other analysts have also been getting more bullish as the company expands overseas and with key retailers.
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