Banking

Is Beyond Meat A Buy? BYND Launches Plant-Based Pepperoni

Since its start over 10 years ago, Beyond Meat (BYND) has emerged as a 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. Its trading history has been rocky since.




X



News of a big distribution deal in January 2021 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.

Beyond Meat Launches Vegan Pepperoni

Beyond Meat products will be coming to select Pizza Hut locations starting Aug. 10. The vegan meat maker is partnering with the Yum Brands (YUM) pizza chain to test plant-based pepperoni products. Beyond Meat previously worked with Pizza Hut to create a vegan Italian sausage pizza that was discontinued in 2020.

The new pepperoni products will be available at 70 locations in five cities, including Albany, N.Y.; Columbus and Macon, Ga.; Houston; and Jacksonville, Fla. BYND stock did not get a boost from the news.

The Pizza Hut launch comes nearly a month after the relaunch of chicken tenders to the Beyond Meat product line. The company previously launched plant-based chicken strips in 2012, only to discontinue them a few years later. Over 400 restaurants nationwide will offer new Beyond Meat chicken menu items.

The return of Beyond’s chicken line was followed by news on July 13 that fast-food eatery Panda Express will pilot plant-based chicken items. Since July 26, customers in select California and New York locations are now able find Beyond Meat orange chicken on the menu.

Beyond Meat Volatile After Earnings Miss

BYND stock was volatile after the company missed Q2 earnings views, reversing higher after an initial decline. Beyond Meat reported a loss of 31 cents per share on revenue of $149.4 million. Wall Street expected a loss of 24 cents and $140 million in revenue.

A bright spot in earnings? Beyond’s food-service sales nearly tripled, hitting $149.4 million as diners returned to restaurants. But grocery sales — which account for a third of Beyond’s business — lagged in the most recent quarter. Earnings were also hampered by an expansion of investments and higher freight costs.

“We continue to make substantial investments in our long-term growth here in the U.S. and abroad,” CEO Ethan Brown said in a news release. He added that the recent spike in Covid cases could “disrupt demand patterns” in the near term.

Beyond Meat executives remained cautious with forward-looking guidance as the delta variant continues its spread in the U.S. and abroad. Beyond expects revenue to fall between $120 million and $140 million in Q3. This falls short of analyst views for revenue of $153.3 million for that period.

Dunkin’ Dropping Beyond From Menu?

BYND stock moved lower in late June after an analyst report revealed Dunkin’ may drop Beyond items from its menu. JP Morgan’s Ken Goldman wrote in a June 23 note to investors that the popular food chain planned to discontinue a breakfast sandwich made with Beyond sausage patties. He hinted that other items could be on the way out at Dunkin’s 9,000 locations.

Dunkin’ has not made an official announcement of the menu change. The restaurant chain told IBD sister company Barron’s that the Beyond breakfast sandwich would continue to be on the menu at several hundred locations across the country. The item first appeared at stores in 2019.

BYND Stock Briefly Joins Meme Stocks Rally

Beyond Meat stock jumped 36% the week of May 28, temporarily breaking its 2021 downtrend. Beyond’s move appeared 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 be fickle. It doesn’t look like BYND stock is still on the meme menu, with shares erasing much of those gains in the following months.

The double-digit weekly gain in late May for Beyond Meat included 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 marked a 22% premium on Beyond’s closing price of 106.58 on May 21. Still, shares are trading 34% 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.

Key Partnerships Lift BYND Stock

BYND stock isn’t in a sustained uptrend, but it’s seen temporary boosts alongside partnership announcements. Shares jumped more than 5% on June 28 after the company announced a partnership with DoorDash (DASH). The food delivery app offered limited-edition Beyond Meat grill kits for the 4th of July holiday.

Shares also soared nearly 20% on Jan. 26 after news of a partnership with PepsiCo (PEP) to produce healthy, protein-filled snacks. The deal was Beyond Meat’s most far-reaching partnership to date, giving the company access to new distribution channels.

The Pepsi agreement is just one of the many partnerships 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 came 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 last September 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.”

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 13 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 3 out of 99. The EPS rating compares a stock’s quarterly and annual earnings-per-share growth with that of all other stocks.

The producer of plant-based meat ranks No. 9 among its food retail peers in terms of Composite Rating. But the Food-Meat Products group currently is ranked a weak No. 148 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 been in a decline since hitting a short-term high of 160.28 in late June. Now the stock is well below its 10-week moving average, hitting resistance near a downward-sloping 21-day line.

BYND stock saw a boost in early 2021 on partnership news, powering above the 150 price level on Jan. 25 to clear a short, handle-like consolidation. But shortly after, the 200 price level became 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 tried to advance amid a Reddit-fueled meme stock rally. A partnership with DoorDash also looked like it might boost Beyond Meat stock. But those gains proved to be very short-lived.

BYND stock is 45% below 52-week highs. Beyond needs time to trend higher and form a new base before investors consider adding it to their portfolios.

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. But the chart’s technical picture remains poor.

Bottom line: BYND stock is not a buy right now. Beyond Meat is failing to generate sustained traction from fundamental catalysts and still needs to prove itself. Investors should watch to see if BYND stock can establish a sustained uptrend above its 50-day and 200-day lines and then build a base with a proper entry point.

To find the best stocks to buy and watch, check out IBD’s Stock Lists page. More stock ideas can be found on our Leaderboard and MarketSmith platforms.

Follow Alexis Garcia on Twitter at @IBD_Alexis.

YOU MAY ALSO LIKE:

These Are The 5 Best Stocks To Buy And Watch Now

IBD Live: Follow The Market With Investing Pros

Find Compelling Growth Stocks With IBD’s Stock Of The Day

Catch The Next Big Winning Stock With MarketSmith


Most Related Links :
Business News Governmental News Finance News

Need Your Help Today. Your $1 can change life.

[charitable_donation_form campaign_id=57167]

Source link

Back to top button