The market turned the heat up on Beyond Meat (BYND) last Friday, sending the stock all the way down to a 52-week low.
Shares of the plant-based meat maker tumbled after the company’s preliminary Q3 top-line left a bad taste in investors’ mouths.
Beyond said revenue for the quarter is now expected to hit $106 million, around 18% below the $130 million midpoint of the prior forecast range between $120 million and $140 million.
The result suggests anticipated year-over-year growth of 12% vs. the prior 42% and widens the expected sequential loss from the prior -13% to a decline of roughly -30%.
The company cited a number of factors for the soft result, among them a drop in foodservice customers due to the Covid-19 Delta variant, order disruptions due to distributor changes at a large customer, and labor shortages which caused delays in distribution expansion and shelf resets. Water damage due to severe weather at the company’s Pennsylvania facility also affected order fulfillment.
Jefferies’ Rob Dickerson says the sell-off reflects not just the disappointing result but also raises a “list of questions around the category’s competitive backdrop, the demand landscape, and profitability.”
The analyst counts “supply chain complexity, cost inflation, and less topline operating leverage (combined with a more attractive pricing strategy),” that over the near-term are likely to “drive EBITDA further into the red.”
And while Dickerson calculates that through FY24, the McDonald’s and YUM partnerships could “drive an incremental” $280 million in revenue, on the retail front, “competitive risks still exist.”
From an investing perspective, the analyst thinks pressure on the stock is unlikely to alleviate right now, saying a bounce is doubtful in the near-term. “With the revenue shortfall in Q3 and questions outstanding, investors could also start to question valuation multiples given slower-than-expected growth for now,” Dickerson explained.
For now, then, Dickerson stays on the sidelines with a Hold rating and $120 price target. Nevertheless, his target still implies 25% upside from current levels. (To watch Dickerson’s track record, click here)
Amongst Wall Street’s analyst corps, Dickerson’s take is one of the more positive ones; the consensus view is that BYND stock is a Moderate Sell, based on 4 Holds and 3 Sells. The analysts expect the share price to stay rang-bound in the coming months, given the average price target currently stands at $100.86. (See BYND stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.