Beyond Meat Crushed After Earnings Shortfall

Beyond Meat Inc. (BYND) is trading lower by nearly 20% on Wednesday after missing Q3 2021 earnings-per-share (EPS) estimates by a wide margin and issuing sharply lower Q4 revenue guidance. The alternative meat producer insisted the Delta variant marked a “major hindrance for a recovery in foodservice revenue” even though most customers, including McDonalds Corp. (MCD), are reporting healthy year-over-year results. BYND has now missed estimates in every quarter since Q1 2020.

Gloomy Outlook

The company also cited supply chain disruptions and worker shortages for the shortfall. Executives failed to discuss the ‘elephant in the room’, i.e. slower adaptation of their fatty but vegan product line by the consuming public. Everyone has tried their burgers and nuggets at least once at this point but it seems the majority has resumed their meat-eating habits. More importantly, this highly-processed, chemically-enhanced food isn’t that good for your health.

Credit Suisse analyst Robert Moskow downgraded Beyond ahead of earnings, noting “The revenue miss in 3Q ($106M vs guidance of $120M-$140M) reinforces our view that Beyond Meat is reaching market saturation faster than expected and will miss its internal growth targets. The meat alternatives category still has potential upside for the next several years, but we are lowering our long-term forecasts for Beyond’s sales and market share. This year’s spate of management departures and many factors cited for the revenue shortfall suggest deeper problems that won’t be quick to fix”.

Wall Street and Technical Outlook

The bottom has dropped out of Wall Street consensus, now standing at an ‘Underweight’ rating based upon 1 ‘Buy’, 1 ‘Overweight’, 10 ‘Hold’, and 1 ‘Underweight’ recommendation. More importantly, 6 analysts are recommending that shareholders close positions.  Price targets currently range from a low of $54 to a Street high $122 while the stock is set to open Wednesday’s session about $5 below the median $80 target. This placement suggests fair value but multiple downgrades are possible in coming sessions.

Beyond Meats came public at 46 in May 2019 and posted an all-time high at 239.71 just two months later. It tested the IPO opening print in March 2020 and turned sharply higher, stalling within 45 points of the prior peak in October 2020. A January buying spike reversed less than 20 points under the high, yielding a steady slide that hit an 18-month low in the pre-market. It’s now trading below the .786 retracement of the 2019 uptrend, exposing a decline into the 2020 low.

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Disclosure: the author held no positions in aforementioned securities at the time of publication.