Beyond meat after gains – is this a buy?

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Iis there a price at which Beyond meat (NASDAQ: BYND) becomes too cheap to ignore, and have we now reached that point?

Shares of the plant-based meat alternative tumble 10% after fourth-quarter earnings missed Wall Street estimates and losses rocketed for the period. Even as shares tumble, investors may still wonder if all the bad news has finally factored into Beyond Meat’s stock. Let’s see whether to buy when all the dust has settled for the vegetable meat maker.

Image source: Getty Images.

No substitute for growth

On the surface, it’s hard to make the case for Beyond Meat. Despite numerous distribution and catering partnerships in recent years, it has not resulted in any appreciable increase in sales. The pandemic clearly played a partial role in this and hurt the meat substitute maker on the foodservice side when restaurants were basically closed.

Yet even in a reopened economy, Beyond Meat has failed to impress. Revenue fell 1% last quarter to $100.7 million as retail sales fell 20%, which he blamed on supply chain disruptions. Losses also widened significantly, tripling to $77.7 million from a loss of $24.5 million, even though it no longer incurred COVID-related costs like last year.

Beyond Meat warned investors that it really sees the situation improving this quarter in provide income advice between 85 and 110 million dollars. The slowdown in demand, five fewer shipping days and the need to offer greater trade discounts were the main causes of the deterioration of the situation.

Previously, it noted that its third-quarter sales weren’t as bad as they would have been otherwise, as it drives forward fourth-quarter sales, mostly in the international market. While international revenue doubled last quarter, it grew only 22% this quarter.

Another expensive alternative

Jefferies (NYSE: JFC) analyst Rob Dickerson reduced its price target on Beyond Meat the other day, which explains some of the drop in value the stock suffered ahead of the earnings report. He pointed to his U.S. chain checks, indicating that any trends the meat-substitute maker suffered last quarter remain fully in play this quarter as well. He lowered his price target to $55 from $90 per share, which given where Beyond Meat is trading at the time of this writing (less than $44 per share) still gives him a advantage. Maybe I’m not so enthusiastic.

Beyond Meat has made strides in making its plant-based meats more attractively priced compared to real beef, but in many cases it’s still more expensive. Safeway, for example, advertises a pound of Beyond Meat ground beef for $9.99 while selling ground beef for between $6 and $12 a pound.

American-style Kobe beef is still cheaper at $8.99 per pound. Same walmart sells Beyond Meat at a premium of up to 300% over other ground beef.

Minced meat in a supermarket window

Image source: Getty Images.

I would say that Beyond Meat has already convinced all early adopters to switch to its plant-based alternatives – and now it needs to influence a wider audience. It’s something he seems to be failing at best.

How far is down?

Wall Street still has an aggressive long-term revenue forecast for Beyond Meat, expecting sales to hit $2.2 billion by mid-decade, an effective five-fold increase in sales. Given the downturn even the meat substitute maker is experiencing, that seems like a tough target to hit.

Scouring the landscape, there is a long list of concerns, including geopolitical turmoil, runaway inflation, labor shortages, competition from larger and better-funded rivals, and continued supply chain disruptions. supply. Considering all of this, Beyond Meat probably has a lot of air under its stock. At best, I’d wait for the company to show sustained consumer acceptance and growth before taking a stake — although the wait could be a long one.

Even with the stock plunging now, I think this food stock still has a lot to fall.

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Rich Duprey has no position in the stocks mentioned. The Motley Fool owns and recommends Beyond Meat, Inc. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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