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Nov. 12, 2021, 8:44 a.m. EST

McDonald’s was the only positive in a quarter full of negatives at Beyond Meat, analysts say

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By Tonya Garcia

The list of problems at Beyond Meat Inc. during the third quarter was long, but the lone item on the list of good things that happened was McDonald’s Corp., analysts say.

Among the troubles Beyond Meat /zigman2/quotes/211617595/composite BYND -5.56% Chief Executive Ethan Brown mentioned on the call were: a resurgence of the delta variant; supply chain disruptions; labor shortages; the company’s reliance on business generated in stores and in-venue consumption; consumers caring less about eating healthy; and damage to packaging materials in Pennsylvania after severe weather.

But on the positive side, McDonald’s /zigman2/quotes/203508018/composite MCD -1.70% is giving the McPlant a try in Austria, the Netherlands and the U.K., as well as at eight restaurants in the U.S.

Brown says he interacted with customers who had tried the sandwich both in the U.S. and the Netherlands.

“Encouragingly, these consumers fit the mold of the flexitarian, not vegan or vegetarian, who are enjoying the McPlant burger,” he said on the call, according to a FactSet transcript.

See: WW banks on new weight loss program after third-quarter slump

Beyond Meat issued a revenue warning at the end of October, and the company still reported wider-than-expected losses. The company is guiding for fourth-quarter revenue in the range of $85 million to $110 million. The FactSet consensus is for revenue of $111.6 million.

The stock sank 18% in early Thursday trading before climbing back to a 14% decline.

“Beyond Meat’s 3Q results proved worse than the preannounced figures as the complexion of sales growth showed weakness in its core U.S. market across all channels,” wrote BTIG analysts in a post-earnings note.

“All eyes now seem to be on the performance of McPlant in Europe and the potential launch in the U.S. next year, but this seems to be the only bright spot in an otherwise disappointing print. The combination of slowing sales growth and heightened spending does not bode well for the earnings model, so the ground seems to be falling in while the company continues to invest for its long-term potential.”

BTIG rates Beyond Meat stock neutral.

Also: Blue Apron says its Heat & Eat single-serve microwave meal launch was successful

Even with the company’s warning, Credit Suisse analysts say investors had hoped the supply chain disruptions, like the water damage, would only be speed bumps. However, it looks like the problems will impact the fourth quarter.

“We view the results as further evidence that Beyond’s business is reaching market saturation faster than expected and that the company has deeper problems that won’t be easy to fix,” wrote analysts led by Robert Moskow.

Credit Suisse also raised questions about all of the explanations for the slowdown that Beyond Meat offered.

“We continue to struggle to understand why Beyond’s portfolio has lagged so far behind the broader recovery in the U.S. foodservice business,” analysts wrote.

Analysts also called out the nearly 16% decline in U.S. retail sales.

/zigman2/quotes/211617595/composite
US : U.S.: Nasdaq
$ 23.78
-1.40 -5.56%
Volume: 2.82M
June 28, 2022 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$1.60 billion
Rev. per Employee
$327,484
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/zigman2/quotes/203508018/composite
US : U.S.: NYSE
$ 242.83
-4.20 -1.70%
Volume: 2.38M
June 28, 2022 4:00p
P/E Ratio
25.66
Dividend Yield
2.27%
Market Cap
$182.70 billion
Rev. per Employee
$116,115
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