Analyst Alexia Howard, who kept her price target of $106 a share, said in a note to investors that she believes "that Beyond Meat's near-term sales growth potential in the U.S. is largely priced in at this point."
Howard said that the El Segundo, California-based company's stock has rallied about 55% year to date, fueled by recent news, such as McDonald's (MCD) - Get Report move to expand its testing of Beyond Meat's P.L.T. burger in Canada, rapper Snoop Dog supporting the promotion of Beyond Sausage patties at Dunkin' Donuts (DNKN) - Get Report and management's comments about its plans to expand to China later this year.
Howard wrote that "the risk/reward has become less attractive following the recent rally."
"In our blue-sky scenario," Howard said, "we assume that following the trial in Canada, McDonald's rolls out the P.L.T. nationwide in the U.S. In this scenario, we expect Beyond Meat to grow its sales from ~$280m in FY19 to ~$910m in FY21, which will likely test the high end of Beyond Meat's capacity based on its current capacity expansion plans."
Howard said that "this will likely test the high end of Beyond Meat's capacity based on its current capacity expansion plans, although further capacity expansion could unlock additional upside on the top line, especially if the company can scale itsupstream pea protein sourcing and downstream co-packing capacity more rapidly."
Beyond Meat signed a multi-year pea protein supply agreement with Roquette, a maker of plant-based ingredients and a pioneer of plant proteins, and Howard said this "will significantly increase the amount of pea protein supply over the next three years."