Beyond Meat Stock (NASDAQ: BYND) plunged 24.23% in Thursday’s premarket trading as the plant-based meat maker missed Street’s expectations for the first quarter of 2022 and reported a higher-than-expected loss.
Beyond Meat shares are down nearly 60% so far this year (as of May 11) as investors fear mounting losses and slowing sales growth.
Despite supply chain and workforce challenges, Beyond Meat reaffirmed its full-year revenue outlook in the range of $560 million to $620 million, reflecting 21% growth. % to 33%.
First quarter results in detail
Beyond Meat’s first-quarter 2022 net revenue rose 1.2% to $109.5 million, below Street’s estimate of $112.4 million. Revenue growth was driven by higher volumes partially offset by lower net revenue per pound, due to higher trade discounts, price reductions in the European Union, unfavorable sales mix and currency headwinds.
Sales through the US restaurant as well as international retail and restaurant channels fell year over year. However, US retail network revenue increased 6.9% due to the introduction of Beyond Meat Jerky, partially offset by lower sales of other products.
The launch of the Plant-Based Jerky significantly reduced Q1’22 gross margin to 0.2% from 30.2% in the prior year quarter. According to the company, Beyond Meat Jerky “uses a complex and expensive manufacturing process.”
However, the company expects Jerky’s manufacturing costs to drop significantly in the second half. Lower net revenue per pound also impacted Q1’22 gross margin.
Overall, the company’s adjusted net loss per share widened significantly to $1.58, from $0.42 in Q1’21, and was worse than analysts’ loss estimate of 1. $01. In addition to the contraction in gross margin, the net result was also affected by higher marketing investments, an increase in non-production staff and higher transport costs.
The Taking of Wall Street
In reaction to the dismal first-quarter results and second-quarter outlook, Barclays analyst Benjamin Theurer downgraded Beyond Meat from Buy to Hold and dramatically reduced its price target to $25 from $80.
The analyst cited “limited short-term visibility”, mounting cost pressures and heavy cash burn as reasons for its rating downgrade.
“For 2H22, we see sales growth reaccelerating, but margins remaining well below historic levels,” Theuer added.
Overall, the street is bearish on the stock with a moderate sell rating based on eight holds and four sells. At $38.18, Beyond Meat’s average price target implies 45.89% upside potential from current levels.
In recent quarters, Beyond Meat’s performance has disappointed its investors. The company will need to deliver improved sales trends and increased profitability in the coming quarters to restore investor confidence in its business.
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