The plant-based meat provider Beyond Meat, Inc. (NASDAQ: BYND) served up a dismal Q1 earnings report yesterday, with a net loss was $27.3 million compared to net income of $1.8 million one year earlier and a gross profit of $32.7 million versus a $37.7 million figure from the previous year. Adjusted EBITDA was a loss of $10.8 million, or -10% of net revenues, compared to Adjusted EBITDA of $13.9 million, or 14.3% of net revenues, in Q1 2020.
The company’s earnings were studied by a pair of analysts who offered very different conclusions based on the new data.
Stephen’s Half-Full Glass: For Stephens & Co. analyst Mark Connelly, Beyond Meat’s Q1 results were good enough to warrant an Overweight rating and a $190 price target.
Connelly theorized that the company’s quarterly numbers were the result of the costs related to investing in research and development, staffing and the expansion of its manufacturing facilities in Europe and Asia.
He observed that driving revenues in food service was difficult due to lower capacity or continued closures — especially in Europe — and he also seemed unconcerned about additional losses for the remainder of the year.
“Turning a profit isn’t the priority for 2021, and neither is food service product roll-outs; and we are encouraged by rising distribution, strong repeat customer stats, and market share gains against tough competition,” he wrote. “Those developments should position Beyond for rapidly accelerating growth and profitability in 2022 and after.”
Connelly also predicted retail is “ultimately going to be a much bigger part of the overall mix” for the company, and pointed out a wider consumer acceptance of healthier food options. The Chinese market could benefit from further cultivation, he stated, because plant-based meat “offers strong political benefits as a way to reduce dependence on imported animal feed,” and predicted plant-based pork in China could become the company’s second-largest product category behind U.S. plant-based beef.
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BTIG’s Half-Empty Glass A somewhat less optimistic analysis was provided by BTIG analyst Peter Saleh, who kept Beyond Meat in a Neutral rating without adding a price target.
Saleh faulted Beyond Meat for missing the BTIG and consensus forecasts, attributing the problem to continued weakness in the food service sector. Saleh expressed hope that the launch of the company’s Beyond Burger 3.0 “could spur demand during the seasonally strong summer grilling season,” but he cautioned the near-term picture had problems.
“While we expect the U.S. restaurant industry to experience explosive sales growth in the coming months and quarters, we believe many operators are focused on a few core items given the scarcity of labor, which does not bode well for the Beyond lineup near-term,” he wrote. “Internationally, retail revenue posted its best quarter with sales rising almost 200%, but food service continued to struggle under tight COVID restrictions with sales declining (44%).”
Saleh applauded the company’s U.S. retail expansion to 32,000 outlets during the first quarter, up 14% from 28,000 locations in the previous quarter, and positively cited its partnerships with McDonald’s Corp (NYSE: MCD) and Yum! Brands, Inc. (NYSE: YUM), even if they did not generate 2021 profits.
But he stressed a problem in Beyond Meat’s declining retail velocity of 18% for the 12-week period ending March 21.
“Given the importance of U.S. retail sales, we believe it is imperative for this figure to turn positive before becoming more constructive on the shares,” he wrote.
BYND Price Action: At last check, Beyond Meat was trading at $113.64, down 4.53%.
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