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Nov. 2, 2019, 10:33 a.m. EDT

Beyond Meat’s McDonald’s trial hasn’t been a ‘blowout,’ Bernstein analysts say

Beyond Meat stock sinks as much as 21% as the lockup on shares expires on Tuesday

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By Tonya Garcia, MarketWatch


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Beyond Meat stock is feeling the pressure from a number of factors, including the end of the stock lockup

Beyond Meat Inc. stock plummeted 22.2% in Tuesday trading with a few factors weighing on the stock, including analyst feedback indicating that the Canadian P.L.T. (plant, lettuce, tomato) trial at McDonald’s Corp. has not been met with a resounding response and the end to the stock lockup.

Beyond Meat /zigman2/quotes/211617595/composite BYND +0.81%   reported its first quarterly profit in the third quarter, and raised its 2019 guidance to revenue in the range of $265 million to $275 million, from $240 million.

Read: Beyond Meat stock falls despite earnings that show first profit in company history

On the call, Chief Executive Ethan Brown talked up the food service partnerships Beyond Meat has entered into, particularly the ones with Subway, the largest restaurant chain in the world by the number of locations, KFC, a Yum Brands Inc. /zigman2/quotes/209029767/composite YUM +0.26%   chain, Dunkin’ Brands Inc. /zigman2/quotes/200947441/composite DNKN +0.05%  , which just expanded the Beyond Breakfast Sausage sandwich to 9,000 locations, and McDonald’s.

Brown also talked about the McDonald’s /zigman2/quotes/203508018/composite MCD +0.14%   trial as the next step in reaching a target for the company.

“This important step reflects a dream becoming reality,” he said, according to a FactSet transcript of the earnings call. “We’ve long had our sights on ubiquitous availability for Beyond Meat, and years ago, I set a goal that my own children would be able to go to major fast food chains and order Beyond by the time they could drive.”

He said Beyond Meat is now available in 53 countries around the world.

However, as some analysts have already noted, just because McDonald’s is trying Beyond Meat doesn’t mean it will end up on the menu.

See: Beyond Meat’s stock soars after McDonald’s unveils test of company-made P.L.T. burgers

“A key question is whether McDonald’s will partner with Beyond Meat in the U.S.,” wrote Bernstein analysts in a note published Monday before the earnings were announced. They think a McDonald’s partnership could add $168 million in fiscal 2019 and help boost sales to $867 million in fiscal 2021.

“Based on our channel checks with select McDonald’s based in Ontario, Canada that are currently testing the Beyond P.L.T. burger, the initial feedback has been largely positive, although it seems that the trial has not been a blowout success thus far that justifies an immediate nationwide rollout across both Canada and the U.S.,” Bernstein said.

And: Beyond Meat initiated at sell as large competitors make gains in plant-based food

And even if Beyond Meat is added to the menu, Bernstein analysts wonder whether the company can keep up with McDonald’s.

“At this rate of capacity expansion, we believe Beyond Meat will be able to keep up with demand growth at the current rate, although if the McDonald’s partnership materializes, Beyond Meat may need to structure the deal such that its products are rolled out on a regional basis at least initially in order to maintain service levels,” analysts wrote in a Tuesday note.

Bernstein rates Beyond Meat stock market perform and raised its price target to $106 from $100.

/zigman2/quotes/211617595/composite
US : U.S.: Nasdaq
$ 74.65
+0.60 +0.81%
Volume: 2.45M
Dec. 10, 2019 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$4.56 billion
Rev. per Employee
N/A
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/zigman2/quotes/209029767/composite
US : U.S.: NYSE
$ 99.24
+0.26 +0.26%
Volume: 1.78M
Dec. 10, 2019 6:30p
P/E Ratio
27.53
Dividend Yield
1.69%
Market Cap
$29.94 billion
Rev. per Employee
$167,294
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/zigman2/quotes/200947441/composite
US : U.S.: Nasdaq
$ 76.22
+0.04 +0.05%
Volume: 473,164
Dec. 10, 2019 4:00p
P/E Ratio
26.86
Dividend Yield
1.97%
Market Cap
$6.31 billion
Rev. per Employee
$1.19M
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/zigman2/quotes/203508018/composite
US : U.S.: NYSE
$ 194.95
+0.27 +0.14%
Volume: 2.47M
Dec. 10, 2019 6:30p
P/E Ratio
25.60
Dividend Yield
2.56%
Market Cap
$146.61 billion
Rev. per Employee
$100,120
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