Plant-based meat producer Beyond Meat (BYND) has been quite volatile over the last couple of years. However, one major development that could strike in the next three months or less may elevate Beyond Meat to superstar status.
I’m neutral on Beyond Meat due to the volatility of its share price, but there may be an opportunity for those who don’t mind it. (See Analysts’ Top Stocks on TipRanks)
Beyond Meat’s stock price for the year so far looks like a graphic of the old idiom: feast or famine. In Beyond Meat’s case, it’s a little heavy on the famine. Beyond Meat kicked off 2021 with one big spike that saw the company go from around $116 to $200 in the space of 10 days.
That spike lasted exactly one day before pulling back almost 10% and leveling off before starting another drop. That drop ultimately plateaued around $130, before dropping again to about $100. A second spike kicked in, which took it over $150 per share.
Then the company started a slide that took the share price under $75. Ultimately, the downward slope continued to the lows of the year.
The latest news seems to be lighting a fire under Beyond Meat. New reports suggest that, in the early part of 2022, Beyond Meat may have a huge new client that will make it a household name: McDonald’s (MCD). The reports say that the McPlant will be launching nationwide and fairly soon.
In fact, it’s sooner than many saw coming. The McPlant was tested in some markets earlier, and reports suggest that the feedback was generally positive. Indeed, it was positive enough to get McDonald’s to step up its timetable and get McPlant on the menu.
McPlant sales are estimated at $75 million annually so far, with Beyond Meat eager to undercut standard meat prices. McDonald’s new connection was sufficient for Piper Sandler to upgrade Beyond Meat from “underweight” to “neutral.”
Cooking Up Something Big?
Beyond Meat’s prospects have been somewhat murky of late. It made some impressive headway back during the pandemic days. When actual meat was tough to come by, until President Trump declared meat processors essential businesses, Beyond Meat tried to step in and fill the gap. Certainly, some developed a taste for the fake meat. However, that wasn’t going to be enough to keep Beyond Meat going for any length of time.
Beyond Meat required access to the fast-food menus of the United States and beyond. It would never be much more than a sideshow, an alternative to the main menu. But get enough sideshows together, and in aggregate, they make one very big show. Connecting to McDonald’s might just be exactly what Beyond Meat needed.
With Impossible Foods having a lock on the Yum Brands (YUM) lineup, Beyond Meat needed its own major corporate presence to keep up. Impossible Foods’ line is looking to expand at Burger King, with the chain currently testing the meatless chicken nuggets.
That’s on top of a Japanese burger launch that’s so vegan it doesn’t even have a bun. Taking a page from KFC’s book, the new vegan burger uses two vegan meat patties to contain lettuce, pickles, and so on.
Beyond Meat is also ramping up its C-suite to take on expansion opportunities. To build its roster, the company has brought in two former Tyson Foods (TSN) executives. Doug Ramsey is now Beyond Meat’s COO.
Meanwhile, Bernie Adcock will be stepping into a newly-minted position as chief supply chain officer. Given the state of the supply chain these days, that might be a more vital role than some realize.
Wall Street’s Take
Turning to Wall Street, Beyond Meat has a Moderate Sell consensus rating. That’s based on one Buy, seven Holds, and six Sells assigned in the past three months. The average Beyond Meat price target of $78.83 implies 20.2% upside potential.
Analyst price targets range from a low of $54 per share to a high of $122 per share.
Concluding Views
I’m staying neutral on Beyond Meat for one very big reason. The same reason that may be about to launch Beyond Meat stock into the sun – the McDonald’s deal.
If Beyond Meat becomes a serious part of the McDonald’s supply chain, then the company is pretty well set as long as there’s a McDonald’s. The world would have to collapse before there stopped being McDonald’s at this point.
However, a company that’s basically built around one big deal leaves itself vulnerable. One significant revenue stream is great until something happens to that revenue stream.
Adding McDonald’s to the roster should make it a winner. If something ever happens to that deal, it could mean Beyond Meat’s end. Thus, I remain neutral.
Disclosure: At the time of publication, Steve Anderson did not have a position in any of the securities mentioned in this article.
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