Stock Analysis & Ideas

Can Beyond Meat Stock Turn Around in 2022?

Shares of faux-meat maker Beyond Meat (BYND) have continued to tumble steadily over the past few months, now down a country mile from its $234 and change high hit back in summer 2020. As the innovative $4.1 billion company sunk lower, its analyst price targets and ratings did too.

Given many analysts tend to have more Buy ratings than Sell ratings, one should take extra due diligence any time the Sell or Hold ratings outweigh the Buys. With just one Buy rating, there are not a lot of believers in Beyond Meat’s turnaround story. It’s been such a painful fall for its shareholders, but could 2022 hold any sort of relief?

There aren’t many things to get excited about going into the new year. Still, the valuation is compelling for true believers in the company’s alt-meat products.

At 8.7 times sales, BYND stock isn’t cheap, but relative to its longer-term growth potential, it may be a relative glimmer of value in an otherwise lofty stock market. For that reason, I am inclined to side with the lone bull analyst on the name. I am bullish. (See Analysts’ Top Stocks on TipRanks)

Beyond Meat Sinks Further into the Seemingly Endless Abyss

The analyst community has the right to be skeptical. The company clocked in some underwhelming third-quarter numbers alongside some pretty muted guidance. Profitability prospects seem distant, which is not good, given rates are likely to rise considerably over the coming years.

Management now expects revenue to fall in a range below its consensus, pointing the finger at COVID-induced supply-chain woes and labor shortages.

Undoubtedly, supply-chain problems and labor issues are not unique to Beyond Meat. Such COVID-19 headwinds have held many companies back over the past year. With a low bar set in front of its going into the fourth quarter, all eyes will set on Beyond Meat and whether it can effectively manage through ongoing headwinds.

For the third quarter, Beyond Meat posted a wider-than-expected per-share loss of $0.87. That’s the fifth consecutive quarter where the company fell short of expectations on the bottom line. Indeed, the trend is no friend of Beyond Meat, and it may take a huge surprising beat to lift the name out of its funk, as it feels the pressure from all sides.

The broader sell-off in high-multiple growth names lacking in profits has added salt to the wounds of Beyond Meat. However, such a broader weakness is likely mostly baked into the share price here.

What Could Turn Beyond Meat Stock Around in 2022?

Supply chains are likely to come back into order in the new year. With that, Beyond Meat and many other firms are likely to finally have a heavy weight lifted from their shoulders.

Further, Beyond Meat is a leader in its niche industry, and the company’s innovative capabilities should not go discounted by investors. While more rivals could move in, count on the company to continue improving its formula (to be healthier, tastier, and more environmentally friendly) while expanding into new meat categories.

R&D expenses are expected to stay elevated, but with that will come the potential for a truly game-changing product. A future version of Beyond Meat’s beef replacement could find itself in the middle of the burgers of more popular restaurant chains.

Demand for McDonald’s (MCD) McPlant could pave the way for more demand in Beyond Meat patties next year. Further, innovation in faux chicken could also open up new growth pathways.

A lot of innovation is going on behind the scenes, even though it may not seem like it. New product taste tests will be hit or miss, but at these valuations, it seems as though investors are not expecting much out of Beyond’s product pipeline. That could mean the odds of a surprise are high as the company battles through ongoing operational challenges.

Finally, Beyond Meat is a powerful brand. It’s quickly becoming synonymous with alternative meat products. For that reason, it may have a wider moat than many believe, even as competitive pressures pick up in the latter half of the decade.

Wall Street’s Take

Turning to Wall Street, BYND stock comes in as a Moderate Sell. Out of 14 analyst ratings, there is one Buy recommendation, seven Hold recommendations, and six Sell recommendations.

The average Beyond Meat price target is $78.83, implying 21% upside potential. Analyst price targets range from a low of $54.00 per share to a high of $122.00 per share.

Disclosure: At the time of publication, Joey Frenette did not have a position in any of the securities mentioned in this article.

Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of TipRanks or its affiliates  Read full disclaimer >

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