Since its start over 10 years ago, Beyond Meat (BYND) has emerged as the leader in plant-based meat alternatives. The vegan meat company’s product line can now be found in more than 80 countries in 122,000 retail and food service locations. After its May 2019 IPO launch, BYND stock rocketed 859% to all-time highs a few months later.
News of a big distribution deal in January provided a temporary boost for Beyond stock. But is BYND stock a buy now? It’s key to analyze the vegan meat company’s fundamental and technical picture first.
BYND Stock Joins Meme Stocks Rally; Jumps On Upgrade
Beyond Meat stock jumped more than 11% on May 27 as it looks to break its downtrend. Beyond’s move appears to be fueled by the Reddit meme stocks trend. Members of popular Reddit board WallStreetBets have catapulted GameStop (GME) and AMC Entertainment (AMC) to sky-high levels in volatile trading action this year.
But Reddit investors can fickle. It’s unclear if BYND stock is still on the meme menu in June, with relatively modest share price action.
The double-digit gain for Beyond Meat comes on the heels of a 10% pop on May 24 after a big upgrade from Bernstein. Analyst Alexia Howard boosted her rating for BYND stock from underperform to outperform, with a target price of 130, up from 101.
The new price target marks a 22% premium on Beyond’s closing price of 106.58 on May 21. Still, shares are trading 36% below their 52-week high.
Howard sees Beyond Meat as a recovery play after a difficult 2020 due to pandemic closures. Her view is that BYND stock is not “a broken growth story.”
The reopening of restaurants alongside the vaccine rollout is a positive signal for Beyond Meat stock. Though the company has been ramping up its retail business, sales haven’t made up for lost revenue in the restaurant sector.
Beyond Meat Stock Earnings
BYND stock fell after the company’s Q1 earnings report on May 6. The plant-based patty maker notched a loss of 42 cents per share on revenue of $108.2 million. Those results underperformed Wall Street’s forecast loss of 27 cents a share on revenue of $114.35 million.
Beyond’s retail sales were up, but those gains were offset by drops in its U.S. food service sales. The company said those trends were similar across international markets. However, CEO Ethan Brown added on the May 6 earnings call that he expects a “slow and steady thaw” of those depressed sales numbers as Covid reopenings take effect.
“We are encouraged by the trends we saw in Q1 revenue,” he said. “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 stock’s earnings come amid growing competition in the plant-based meat market. Tyson Foods (TSN) announced a new lineup of vegan meat products just days before Beyond’s earnings. Brown says that BYND stock’s continued investment in infrastructure and partnerships give the company 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 said. He added that the company’s focus on “three key levers of taste, health, and cost” will enable a runway for growth when it comes to mass adoption.
Key Partnerships Lift BYND Stock
BYND stock isn’t in a sustained uptrend, but it’s seen temporary boosts alongside partnership announcements. Shares soared nearly 20% on Jan. 26 after news of a partnership with PepsiCo (PEP) to produce healthy, protein-filled snacks.
The deal is Beyond Meat’s potentially most far-reaching partnership to date. It would give the company access to new distribution channels.
The Pepsi agreement is the latest marquee partnership for Beyond Meat. The vegan meat maker announced a deal with Yum Brands‘ (YUM) Taco Bell on Jan. 14. Announcements of both those partnerships helped BYND stock surge 42% in the month of January.
Fast-food giant McDonald’s (MCD) announced it would begin offering McPlant menu items made with Beyond products last November. The expansion of McDonald’s vegetarian menu options comes after a test run in Canada with Beyond Meat products.
Beyond Meat’s expansion plans include other retail locations as well. CEO Brown announced on the Nov. 9 earnings call that Beyond Burger would be available at 7,000 CVS (CVS) locations nationwide in January 2021.
The vegan meat company also expanded its food service partnerships in the U.S. to 650 Wawa convenience stores. Beyond Meat plans on continuing trials of plant-based meat products at select KFC and Dunkin’ Donuts locations, owned by parent companies Yum Brands and Dunkin’ Brands (DNKN), respectively.
Beyond Meat Expands To China
Additionally, Beyond Meat said on Sept. 8 it’s building production facilities near Shanghai, China. This makes Beyond the first foreign vegan meat company to set up operations in the country.
Beyond Meat announced the grand opening of its first production plant in China on April 7.
The Shanghai-based production facility is key to growing Beyond Meat’s presence in the Chinese market. BYND stock views the region as a significant part of the company’s long-term growth strategy.
The opening of the China-based production facility comes after the launch of a new e-commerce site for Beyond Meat. The platform allows consumers to purchase vegan meat products directly from the company.
Beyond Meat is also collaborating with Yum China (YUMC)-owned restaurants — including KFC, Pizza Hut and Taco Bell. The plant-based-burger maker also has netted key partnerships with Chinese e-commerce giant Alibaba‘s (BABA) Freshippo grocery stores.
“In Asia, our goal of establishing a production footprint before the end of 2020 remains on track,” Brown said. “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 relatively new industry, Barclays analysts last May projected sales of vegan meat could hit $140 billion in the next 10 years.
Beyond Meat’s most notable rival is privately owned Impossible Foods. In addition to successful restaurant partnerships that include Burger King (QSR), the Northern California-based company also has aggressively expanded its own retail footprint during the pandemic.
The country’s largest meat producer, Tyson Foods, also entered the vegan meat space in 2019. Tyson sells plant-based meat in the form of nuggets and blended protein alternatives through its Raised & Rooted label in more than 7,000 stores across the U.S.
And in May, Tyson debuted new plant-based burgers, sausages and imitation ground meat in U.S. grocery stores.
BYND Stock Fundamental Analysis
To determine whether BYND stock is a buy now, fundamental and technical analysis is key.
The IBD Stock Checkup tool shows that BYND stock has an IBD Composite Rating of 23 out of a best-possible 99. The rating measures a stock based on the most important fundamental and technical stock-picking criteria. IBD research shows some of the greatest stock winners of all time often have a Composite Rating of at least 95 near the start of big runs.
The Composite Rating looks at earnings and sales growth, profit margins, return on equity and relative stock price performance, among other metrics.
BYND stock has an EPS Rating of 7 out of 99. The EPS rating compares a stock’s quarterly and annual earnings-per-share growth with that of all other stocks.
The plant-based meat producer ranks No. 8 among its food retail peers in terms of Composite Rating. Industrias Bachoco (IBA) holds the top spot in IBD’s Food-Meat Products industry group. Sanderson Farms (SAFM) is No. 2. Pilgrim’s Pride (PPC) is ranked third.
This group currently is ranked a weak No. 181 out of the 197 industry groups IBD tracks. Investors should focus on stocks in the top quartile of IBD’s groups.
BYND Stock Technical Analysis
BYND stock has surged from a 99.86 low in just a few weeks. Shares have been in a four-month downtrend since hitting a high of 221 in January. That’s when Beyond Meat rebounded on news of partnerships with Taco Bell and PepsiCo.
Shares powered above the 150 price level on Jan. 25, clearing a short, handle-like consolidation. But shortly after, the 200 price level was a resistance area for the stock.
Though Beyond Meat stock gapped up on the PepsiCo partnership, shares quickly filled the gap. That’s a negative sign. When a stock gaps up, it’s ideal to see it hold that gain. That’s a signal of power and institutional support.
After plunging all the way to the 100 level in the following months, Beyond Meat stock jumped 10% on May 24 following an upgrade from analysts at Bernstein. This strong move sent BYND stock above its downward sloping 21-day line for the first time in almost a month.
Shares are continuing their advance amid a Reddit-fueled meme stock rally. BYND stock is now trying to hold above its 200-day line.
Though BYND stock is moving well off recent lows, shares are nearly 33% below 52-week highs. BYND stock needs time to trend higher and form a new base, then break out or trigger another entry.
Beyond Meat Stock: Is It A Buy Right Now?
The long-term outlook for plant-based meat seems compelling, and Beyond Meat is seeing a rebound in the food-service market. Forward-looking earnings estimates are encouraging, but the chart’s technical picture remains poor.
Bottom line: BYND stock is not a buy right now. Though the recent heavy-volume rebound is a positive development, Beyond Meat stock still needs to prove itself.
Investors should watch to see if BYND stock can establish a sustained uptrend above the 200-day line and then build a base with a proper entry point.
Follow Alexis Garcia on Twitter at @IBD_Alexis.
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