Beyond Meat shares fall while analysts worry about long-term growth

A package of Beyond Meat steak crumbs is shown for a photo in Tiskilwa, Illinois, April 23, 2019.

Daniel Acker | Bloomberg | Getty pictures

Beyond Meats shares cratered 17% in morning trading on Thursday when Wall Street expressed doubts about the company’s growth prospects.

The plant-based meat producer reported disappointing results for the third quarter after Wednesday. The loss was larger than expected, while revenues fell below expectations, even after a warning from the company last month. Beyond also issued a bleak outlook indicating that sales would not return immediately.

Jefferies called it “the quarter that probably broke the camel̵[ads1]7;s back.” Bernstein analyst Alexia Howard downgraded the stock and asked investors not to buy the decline.

“We view the results as further evidence that Beyond’s business is reaching market saturation faster than expected and that the company has deeper issues that will not be easy to fix,” Credit Suisse analyst Robert Moskow wrote in a note.

Beyond blamed a number of factors for the weak quarter, including severe weather, the delta variant and the restaurants’ work challenges. CEO Ethan Brown told investors that the problems were largely short-term.

However, analysts are more skeptical. JP Morgan’s Ken Goldman quoted Maple Leaf Foods CEO Michael McCain, who told investors last week that the company was seeing a “marked decline” in the plant-based protein category, which could indicate a shift from the high growth rates expected by the industry.

“We are not yet sure who is right – Beyond Meat or Maple Leaf Foods – but when we hear comments like this, it is difficult to be completely sure of the future of the category,” Goldman wrote.

Brown also said Wednesday night that he is optimistic about 2022. But the company has not convinced analysts that it is true. Bank of America Securities analyst Bryan Spillane wrote in a note that next year’s results will depend heavily on the launch of McDonald’s McPlant burger and partnerships with other national chains, such as Yum Brands’ Pizza Hut. McDonald’s is currently conducting an operational test of McPlant in a handful of American restaurants and has begun selling the burger in a few international markets.

Spillane also said that one area of ​​concern is that the United States’ testing and demand for meat alternatives has declined, especially in grocery stores.

Jefferies analyst Rob Dickerson predicted that the stock is likely to remain under pressure until there is a better understanding of the long-term development of plant-based meat, consumption rates and the competitive landscape. Including Thursday’s fall, shares in Beyond have fallen 38% this year, giving it a market value of $ 4.88 billion.

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