Beyond Meat (BYND) is still the hottest IPO of the year.
Unfortunately, the stock has begun to pull back, and analysts say we could see even more downside on the announcement of a second offering of 3.25 million shares, and mixed earnings.
For starters, the company posted a loss of 24 cents a share, as compared to expectations for a loss of eight cents. Revenue was impressive at $67.3 million, as compared to expectations for $52.7 million thanks to new restaurant partnerships and greater product demand.
Going forward, the company does expect for its second and third quarters to be its strongest, forecasting higher revenue in the third quarter. The company also raised its fiscal 2019 outlook for revenue and expects for net sales for the full-year to reach $240 million.
As a result of mixed earnings, some analysts aren’t recommending the stock here.
“We remain on the sidelines as valuation appears stretched at over 40x enterprise value/next twelve months sales, implying limited upside potential from a valuation perspective,” Bernstein analysts said, as quoted by CNBC. “The question from here is whether the company can continue to deliver positive news that surprises to the upside.”
“We maintain our Neutral rating but raise our estimates and price target (the latter is migrating to December 2020 from December 2019). We continue to see BYND as a beat-and-raise story, one for which – at least in the near-term –fundamental momentum may matter more than valuation. With (a) short interest still hovering around 50% of the float at last measure (well above the group average of 6.8%), (b) Nielsen data getting better every week recently, and (c) 3Q likely to impress, we still view being negative on the stock as a risky proposition right now,” say JP Morgan analysts, as also quoted by CNBC.
However, The Future is Bright
Interesting to note, the company has long-term potential as more than 18% of Americans are now trying to eat less meat, according to the NPD Group, as noted by CNBC. Plus, there’s no shortage of consumer interest. Grocery sales of meat alternatives were up nearly 20% to $878 million for the year ended January 5, 2019, according to Fortune.
Veggie Burger Mania Hits Corporate America
Tyson Foods said it would introduce a meatless product in coming months. CEO Noel White told analysts in May 2019 the company would launch that product this summer on a limited basis, with a wider rollout in October and November, as reported by CNBC. McDonald’s just began selling its veggie burgers in Germany.
Even Burger King rolled out its Impossible Whopper.
All as the public just begins to change their tastes, and begin to eat less meat.