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 84 countries in 112,000 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 recently provided a temporary boost for Beyond stock, which is trying to get back to prior all-time highs — but it still has a long way to go.
Is BYND stock a buy now? It’s key to analyze the vegan meat company’s fundamental and technical picture first.
Beyond Meat Stock Earnings
Beyond Meat posted disappointing Q3 earnings results on Nov. 9. The vegan meat maker reported an adjusted loss of 28 cents a share on revenue of $94.4 million, up just 2.7% from last year. Analysts expected Beyond Meat earnings of 3 cents a share on revenue of $135.56 million.
After the results were announced, BYND stock plunged to hit a six-month low in intraday trade before paring its losses.
“We experienced the full brunt and unpredictability of Covid-19’s impact for the first time in Q3,” CEO Ethan Brown stated on the earnings call.
Brown said the drop in Q3 revenue was driven by the lack of panic purchases and stockpiling made by consumers at the onset of the coronavirus pandemic.
“In light of what we view as transitory Covid-related factors, contrasted with enduring strengths of our business, we have not blinked in our focus on the exciting long-term growth path ahead of us,” Brown said.
BYND Stock News: Beyond Meat Soars After PepsiCo Deal
The deal is Beyond Meat’s potentially most far-reaching partnership. It would give the vegan meat maker access to new distribution channels.
The Pepsi agreement is the latest marquee partnership for Beyond Meat. The vegan meat maker announced a deal with Taco Bell on Jan. 14. Taco Bell is owned by Yum Brands (YUM). 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.
But BYND stock didn’t get a meaningful boost from the McPlant news. McDonald’s did not cite any third-party involvement in the development of its vegetarian menu.
However, shares of Beyond Meat slightly recovered after the company told CNBC it’s partnering with McDonald’s on the meatless McPlant items.
The McDonald’s collaboration is one of several key partnerships in Beyond Meat’s expansion plans. 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.
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 Expands To China
Plans for China-based production come a month 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.
Aside from this new direct-to-consumer initiative, Beyond Meat’s growth agenda hinges on expanded retail partnerships and investments in the U.S. and Asia.
The vegan meat company also expanded its food service partnerships in the U.S. Beyond Meat products recently have been added 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.
In Asia this year, Beyond Meat began 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 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
Credit Suisse says Beyond Meat is well-positioned in the fake-meat market.
“Beyond may emerge as a net beneficiary of the pandemic in the near term due to strong demand in (the) retail channel (48% of sales) and in the long term due to rising consumer interest in healthier foods,” Credit Suisse analyst Robert Moskow wrote in a June report.
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 (TSN), 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.
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 5 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. 4 among its food retail peers in terms of Composite Rating. Pilgrim’s Pride (PPC) holds the top spot in IBD’s Food-Meat Products industry group. Tyson Foods (TSN) is No. 2, while Mexican meat producer Industrias Bachocho (IBA) ranks third.
However, this group currently is ranked a dismal No. 171 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 made its Nasdaq debut in May 2019 at 25. Shares of Beyond Meat quickly made a strong move in the following three months.
Beyond Meat stock hit an all-time high of 239.71 in July 2019. But then BYND began declining almost as quickly as it climbed.
The most definitive signal for investors to take their profits from the IPO move came that August when shares closed below their 50-day moving average line. BYND stock then underperformed the overall market the rest of 2019.
Fast forward to 2021, and Beyond Meat stock tried to rebound 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. This move could have been viewed as an early entry point for aggressive investors.
But the 200 price level appears to be a resistance area for the stock. Though shares of Beyond Meat gapped up on the PepsiCo partnership, the stock had a weak first five-minute bar that day, and closed near the low. That’s weak action.
Shares are now filling the gap, which is another 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.
Investors who initiated positions at the early entry point around 145 or 150 still have some cushion, but should review their sell rules so a double-digit gain doesn’t turn into a loss.
Beyond Meat Stock: Is It A Buy Right Now?
The long-term outlook for plant-based meat looks compelling, and Beyond Meat is navigating a shift in retail strategy amid the ongoing pandemic. Forward-looking earnings estimates are encouraging, but the chart’s technical picture has worsened.
Bottom line: BYND stock is not a buy right now. Though the PepsiCo-fueled gap-up seemed compelling, shares quickly fell to the bottom of their trading range and have now filled the gap. Keep an eye out for the development of a new proper entry.
Follow Alexis Garcia on Twitter at @IBD_Alexis.
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