Beyond Meat Inc. /zigman2/quotes/211617595/composite BYND +1.52% was downgraded to neutral from buy at BTIG, with analysts citing the focus on chicken sandwiches at restaurant chains.
“While we continue to believe in the long-term trend toward plant-based meats in the grocery and foodservice channels, we expect restaurant operators will remain focused on throughput over menu innovation, limiting adoption and sales growth through the foodservice channel this year,” wrote analysts led by Peter Saleh.
“Menu innovation for the first half of this year (at the very least) is focused on chicken and not beef for many restaurant concepts, with the introduction of several chicken sandwiches across the quick-service space.”
Since the beginning of the year, McDonald’s Corp. /zigman2/quotes/203508018/composite MCD +1.00% , Shake Shack Inc. /zigman2/quotes/209397077/composite SHAK +2.47% and Yum Brands Inc.’s /zigman2/quotes/209029767/composite YUM +0.79% KFC have each announced a new chicken sandwich.
This hasn’t slowed down Beyond Meat, which has a new partnership with another Yum Brands chain, Taco Bell. And Beyond Meat has announced it will be on the menu at Jindingxuan, a 24-hour Chinese food chain in Beijing. Jindingxuan is adding eight new dishes that feature Beyond Meat’s plant-based protein including salted egg yolk steamed plant-based meat cakes and fried lotus root bites.
Even with the continued developments, BTIG says international partnerships, especially those in Europe, will be constrained by the COVID-19 pandemic.
“Looking ahead to the balance of the year, we do not expect this sales channel to rebound until a vaccine is more widely available and international consumers return to their daily routines,” analysts said.
“Furthermore, we expect recent lockdowns to limit any sales upside in the near future.”
BTIG isn’t the only analyst group that has come to this conclusion.
“In the near term, we expect lingering COVID-19 headwinds to weigh on the shares as foodservice sales may experience pressure due to the recent surge in COVID-19 cases and colder weather (limits outdoor dining), while retail sales may not experience the same consumer stockpiling benefit Beyond Meat saw earlier in 2020,” wrote Arun Sundaram, equity analyst at CFRA Research.
CFRA rates Beyond Meat shares sell with an $85 price target.
Analyst groups have also called out Beyond Meat’s third-quarter earnings report in November, in which the company swung to a loss and reported just a 3% revenue increase.
“Our financial results reflect a quarter where for the first time since the pandemic began, we experienced the full brunt and unpredictability of COVID-19 on our net revenues and accordingly, throughout our P&L,” said Chief Executive Ethan Brown in a statement.
“Unlike the second quarter where record retail buying and freezer loading by consumers offset the deterioration of our foodservice business as COVID-19 stay-at-home and related measures set in, the long tail of retail stockpiling by consumers, coupled with continued challenges across the majority of our foodservice customers, led to Q3 results that were lower than we expected.”