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Beyond Meat Tumbles As 'Full Brunt of COVID-19' Leads To Surprise Third Quarter Loss

Founder and CEO Ethan Brown said Beyond Meat felt the 'full brunt' of COVID-19 over a disappointing third quarter that ended with a surprise loss amid slowing retail and foodservice sales.

Beyond Meat Inc.  (BYND) - Get Beyond Meat Inc. Report shares plunged lower Tuesday after the plant-based food manufacturer posted a surprise third quarter loss amid what it called the 'full brunt' of the coronavirus pandemic.  

Beyond Meat said its adjusted loss for the three months ending in September were pegged at 28 cents per share, a huge swing from its 6 cents per share profit over the same period last year and the Street consensus forecast of a 5 cents per share profit.

Group revenues, Beyond Meat said, rose 2.7% to $94.4 billion, but that tally fell far short of analysts' forecasts of $132.8 million as retail sales slowed following second quarter stockpiling and restaurant traffic failed to ignite following COVID re-openings around the country. 

Beyond Meat said its near-term outlook will continue to be shaped by the scale of the pandemic, and cautioned investors to expect foodservice revenue interruptions, new product launch delays and increased uncertainty.

"We experienced the full brunt and unpredictability of COVID-19's impact for the first time in Q3, producing net revenues of $94 million, a sequential drop from record net revenues of $113 million in Q2," founder and CEO Ethan Brown told investors on a conference call late Monday.

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"While the effect of COVID-19 in our foodservice business is offset by the unprecedented surge and retail grocery demand in the second quarter, our third quarter did not enjoy the same level of benefit and was conversely disadvantaged by consumer stock freezers and subsequent moderation in buying following this run-up in grocery spending in the previous quarter," he added.

Beyond Meat shares were marked 21.2% lower in early trading Tuesday to change hands at $118.75 each, a move that still leaves the stock with a year-to-date gain of around 60%.

Some of the pre-market decline, however, was pared by news that Yum! Brands'  (YUM) - Get Yum! Brands Inc. Report Pizza Hut will offer Beyond Meat sausage on pies sold to customers in both the US and the United Kingdom as part of a limited time offer. 

"Some may look at the pullback in the shares we expect tomorrow as an opportunity to build a position in an early-stage growth story that directly benefits from a post COVID world," said Credit Suisse analyst Robert Moskow, who lowered his price target on the group to $120 per share and cut his current and next year sales estimates .

"We see several reasons to remain cautious including: 1) heavy exposure to the most impaired channels of trade within Foodservice; 2) uncertainty regarding Beyond’s level of participation in McDonald’s new McPlant burger; and 3) decelerating growth trends in U.S. Retail consumption," he added.