Beyond Meat Could Sell Off into Double Digits
Beyond Meat Inc. (BYND) initially traded higher despite missing Q4 2020 top and bottom line estimates by wide margins on Feb. 25, attracting a large supply of bulls who promptly got trapped in a 21-point decline. The stock has continued to struggle in the last week and is now testing February support in the 130s, raising odds for a breakdown that relinquishes the last tranche of January’s vertical assault to an 18-month high.
Partnership with McDonald’s
Investors forgave the quarter and a profit warning after the company announced partnerships with McDonald’s Corp. (MCD) and Yum! Brands Inc. (YUM). The Mickey D. news, in particular, stoked buying interest after a failed trial of Beyond’s plant-based meat in Canada in 2020. However, pleasure turned to pain when the fast food giant “clarified’ the partnership, advising the McPlant burger would be limited to franchises that choose to carry the item.
BTIG Research analyst Peter Saleh reiterated a ‘Neutral’ rating after the news, noting “While the announcements are encouraging, we don’t anticipate much revenue from these partnerships in 2021, as the domestic quick service industry remains focused on core menu items and chicken, rather than plant-based meat. While we continue to believe in the long-term consumer adoption of plant-based meat, we don’t expect the Beyond Burger to be tested or make its debut in the U.S. in 2021, as McDonald’s and the industry remain focused on chicken.”
Wall Street and Technical Outlook
Wall Street has turned bearish on Beyond Meat’s outlook in the last year, posting a consensus ‘Hold’ rating based upon 2 ‘Buy’ and 8 ‘Hold’ recommendations. More importantly, four analysts now recommend that shareholders close positions and move to the sidelines. Price targets currently range from a low of $112 to a Street-high $184 while the stock is set to open Wednesday’s U.S. session about $2 below the median $140 target.
The stock soared after coming public at 46 in May 2019, lifting to an all-time high at 239.71 in July. The wheels came off into 2020, with the momentum crowd jumping ship in reaction to insider selling and secondary offerings. It fell within two points of the IPO opening print in March and turned higher, posting three higher highs into January 2021 when it topped out just 19 points below the 2019 peak. Aggressive sellers have taken control since that time, with a decline into the November low at 113.26 the path of least resistance.
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Disclosure: the author held no positions in aforementioned securities at the time of publication.