2020 has been kind to Beyond Meat (BYND), to say the least. Since the year kicked off, shares have skyrocketed 104%, and investors are wondering if there’s still more fuel left in the tank. BTIG is among those saying there’s plenty of room for the plant-based meat company to sprout roots and grow.
Representing the firm, 5-star analyst Peter Saleh highlights the increasing shift to plant-based meats as people from all over the world adopt more sustainable diets, with the demand expected to keep rising across a broader consumer demographic. In addition, he points out that there’s significant sales potential from partnerships.
On June 8, BYND announced that it had partnered with one of the top distributors of imported food in China, Sinodis, for national distribution. Looking more closely at the partnership, distribution will span a network of more than 4,500 wholesalers in retail (grocery), restaurants and hospitality. With the sales benefit set to materialize in Q3 2020 and accelerate into 2021, Saleh believes this collaboration is “the first step in building the foundation for accelerated growth in the region.”
“We note that while this distribution capability is essential to gaining market share in China, the partnership is not exclusive. With that said, we note that this partnership is for branded Beyond products, and not private label distribution. We believe this capability will significantly aid the company in building the Beyond Meat brand in Asia,” Saleh commented.
It should be noted that BYND didn’t offer up any financial targets for the partnership, but it did say that Sinodis would start with ground beef and burgers first, before adding sausage and other products to the distribution.
Going forward, Saleh argues that China will remain a key market throughout the next few years. “We expect the company to eventually expand its co-manufacturing capacity and invest in extrusion capabilities to better service this market. We expect Beyond Meat to remain aggressive with investments in this market and believe national brands like KFC and Pizza Hut which are owned by Yum China could play a material role in the brands growth trajectory if limited time offers, perform well,” he explained.
That being said, Saleh acknowledges that BYND has faced headwinds related to increasing manufacturing capacity and driving frequency at quick-service restaurants, but “partnerships with restaurant operators including Starbucks, Dunkin’ and potentially McDonald’s will quickly elevate Beyond to a national scale and provides a flywheel effect for sales in the grocery channel”, in his opinion.
Everything BYND has going for it prompted Saleh to stick with his bullish stance. To this end, he reiterated a Buy rating and $173 price target. This target suggests shares could gain 12% in the next year. (To watch Saleh’s track record, click here)
Looking at the consensus breakdown, other analysts take a more cautious approach. With 3 Buys, 5 Holds and 5 Sells, the word on the Street is that BYND is a Hold. The $85.78 stock-price forecast brings the downside potential to 44%.
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