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Beyond Meat Stock Drops; Argus Cuts to Hold on Revenue Outlook

Beyond Meat stock drops after Argus downgraded it to hold. The plant-based-meat producer's revenue guidance missed expectations.

Shares of Beyond Meat  (BYND) - Get Beyond Meat, Inc. Report slipped Wednesday after an analyst at Argus Research downgraded the plant-based-meat company to hold, citing weak revenue guidance for the third quarter.

Shares of the El Segundo, Calif., company at last check dropped 2.6% to $121.05.

Argus analyst Jim Kelleher downgraded Beyond Meat to hold from buy, citing the company's below-consensus Q3 revenue guidance, reported earlier this month. 

Kelleher in a note wrote that the weakness was being driven by labor shortages and slowing sales to food-service companies. He also cited his concern that the delta variant of COVID-19 will hurt food-service sales.

The plant-based-meat maker posted a wider-than-expected fiscal-second-quarter loss and had issued a third-quarter warning.

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Beyond Meat had cautioned of “near-term uncertainty related to COVID-19 and its potential impact on retail and food-service demand levels.” 

That resulted in an estimate of third-quarter revenue between $120 million to $140 million — short of the $152.9 million forecast by FactSet.

Kelleher also said that Beyond Meat was investing for long-term growth. But he warned that as it adds capacity to improve operating leverage, near-term margins would be hurt.

On Aug. 10, Yum Brands'  (YUM) - Get Yum! Brands, Inc. (YUM) Report Pizza Hut added Beyond Meat's pepperoni topping to its menu. 

The topping is the first product created under a partnership Yum Brands and Beyond Meat unveiled in February.

Last month, Beyond Meat unveiled plant-based chicken tenders at restaurants across the U.S. The move came as consumer demand for chicken was skyrocketing while supplies nationally were short.