The bearish momentum that was weighing on Beyond Meat (NASDAQ: BYND) shares has just subsided. Yet, despite Beyond Meat stock recovering from its 95% peak-to-trough collapse, analysts remain cautious.
Notwithstanding the fact that investors have lost interest in plant-based meat alternatives (sales were down more than 20% in Q4), I remain bullish on Beyond Meat stock.
I still like the product and believe that the stock has fallen so much that it may not take much to move the needle higher.
But, the company’s fundamentals are not encouraging.
At these depths, investors will be picking up a lot of baggage with the name.
It’s difficult not to enjoy what the firm is cooking up for people with a strong value mentality and faith in management.
Many investors are hopeful that the company can limit its cash leak in the face of falling demand.
Novelty Wearing Off
Clearly, the novelty of substitute meat was wearing off.
It’s no longer as fresh or fascinating as it once was! Nonetheless, I believe the recession and increased competition in the market are the two biggest factors dragging on Beyond Meat stock.
Finally, I see opportunities for Beyond Meat to re-establish itself.
The corporation cannot control the effects of the recession (or inflation), but it can continue to strike a balance between innovation and cost-cutting.
Even after a decent quarter, Beyond Meat isn’t out of the woods.
There is still a lot of work to be done if the company is to retain its recent momentum, with shares up over 65% from their lows in December 2022.
That said, if the company can execute, there are plenty of opportunities to profit as it goes beyond (or should I say, beyond) the “perfect storm” of headwinds.
The company is still losing money in large amounts.
That is hardly the formula for reviving the alternative-meat pioneer in a rising-rate environment.
Beyond Meat stock’s recent post-earnings rally, according to BTIG analyst Peter Saleh, could be fleeting. Particularly, Saleh anticipates margin pressure, among other problems, on the horizon.
Indeed, there isn’t much room for error if management is to pull off a turnaround.
Mr. Saleh is not the only analyst who believes Beyond Meat stock will give up its recent gains.
Analysts tracking the stock grade the stock as a “Moderate Sell,” with no Buys.
What is the Target Price for Beyond Meat Stock?
According to Wall Street, BYND stock is a Moderate Sell.
There are no Buys, three Holds, and six Sell recommendations out of nine analyst ratings.
Beyond Meat stock price targets average $11.50, reflecting a 32.1% downside potential.
Analysts’ price targets range from $5.00 per share to $20.00 per share.
Don’t Dismiss Beyond Meat’s Turnaround Plans
Beyond Meat’s ability to turn things around is viewed with skepticism. Yet, I believe there is value in giving management the benefit of the doubt as it proceeds on with its goals.
A Red Bull marketing executive was hired to beef up (forgive the pun) the retail side of the business.
In addition, the company is collaborating with grocers and implementing other changes to increase operational efficiencies.
Beyond Meat may be able to make its product cool again with a strong marketing approach.
In any event, recent moves by Beyond to better its footing in order to grow as a “leaner” company with 19% fewer people are positive.
Those who support management, on the other hand, will be siding with Wall Street.
With no analyst Buy ratings, it’s evident that Beyond Meat is more of a show-me story, given management’s lack of success in the company’s relatively short time as a publicly traded company.
In a post-recession world, the plant-based business may also fire up again.
Substitute meats are costly, and when times are difficult, they are less competitive than the real thing.
Regardless, I consider plant-based meats to be more than a passing trend.
After economic conditions have normalized, we’ll have a clearer idea of what to make of the relatively new market that has gone bust.
While the desire for Beyond Meat is unlikely to reach pandemic levels anytime soon, I don’t think it’s unreasonable to expect the alternative meat trend to resurface once customers have more disposable cash and Beyond Meat can offer up new formulas and products.
In essence, I consider plant-based foods to be more “discretionary” than genuine meat.
The Verdict on BYND Stock
With anticipated margin challenges, Beyond Meat stock is difficult to value.
Only time will tell if the turnaround strategy is successful. Nonetheless, I don’t think 2.7 times revenue (it used to be over 20x) is too much for a company eager to prove all of its Wall Street critics wrong.
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