Beyond Meat Jumps as Stephens Sees Higher Volumes, Cost Controls

Beyond Meat shares were initiated overweight with a $190 price target at investment firm Stephens.
Publish date:

Beyond Meat  (BYND) - Get Report shares were higher on Friday after analysts at Stephens initiated coverage of the alternative-meat maker with an overweight rating. 

Analyst Mark Connelly placed a $190 price target on the stock, indicating 42% potential upside from the stock's Thursday closing price. 

“[Alternative] protein went from a novelty to one of the most successful new food-product launches in history in just two years,” Connelly said. 

The bear case against Beyond is the increased competition from rivals like Impossible Foods. 

But Connelly says increased competition also means increased consumer awareness and a wider total addressable market. 

Quick-service restaurants have been adding Beyond Meat products, as well as competitors' products, to their menus.

"QSRs will help highlight the international growth opportunity... and alt protein can address some of China's most-challenging food production issues," Connelly said, according to Bloomberg. 

While product costs remain high, Connelly expects increased volume, as well as process efficiencies and ingredient optimization, to bring down prices. 

Earlier this month, Beyond Meat said it would expand its distribution deal with Walmart  (WMT) - Get Report

Beyond Meat said its Beyond Sausage Hot Italian will be added to the fresh-meat aisle of around 400 Walmart stores, alongside the expanded distribution of its Cookout Classic value pack to around 500 locations. 

The moves follow Beyond Meat's recent marketing deals with PepsiCo  (PEP) - Get Report, McDonald's  (MCD) - Get Report and Yum Brands  (YUM) - Get Report, which the group hopes will accelerate revenue following a disappointing second quarter.

Beyond Meat first unveiled its broader ambitions with Walmart following its second-quarter-earnings report last August. 

Beyond Meat shares at last check were rising 2.4% to $136.95. On Feb. 26 the stock touched a 52-week high $221.