Sales at Beyond Meat are split roughly equally between restaurants and food retailers. That makes the faux-burger company unique. Tyson Foods, for instance, makes roughly 30% of its meat sales at food-service establishments, based on recent filings.
Right now, that’s an advantage for Beyond Meat (ticker: BYND). Restaurant sales are growing faster as establishments such as McDonald’s (MCD) are eager to offer new, vegan products to consumers. But the curse of high growth means Beyond’s advantage is a risk. Restaurants could move away from plant-based meat if the sales bump doesn’t last. That would spell disaster for Beyond shares.
That conundrum led UBS analyst Steven Strycula to estimate the total opportunity for plant-based meat in U.S. restaurants. “We forecast U.S. food service channel sales to reach about $8bn.... by 2025,” wrote the analyst in a Tuesday research report, referring to plant-based meat.
That’s a lot. It represents an average annual growth rate of 42% over the next five years for all plant-based meats. The analysis gives Strycula confidence Beyond’s sales in the restaurant market could nearly triple to more than $1 billion in coming years.
He doesn’t think faux burgers and chicken products are a restaurant fad.
Based on Strycula’s math, Beyond has about 35% to 40% of the restaurant market currently. Beyond’s “fresh segment” sales, which are mainly to restaurants, annualize to about $350 million a year, net of discounts, based on third-quarter numbers. Depending on its market share, Beyond will likely hit $1 billion in food-service sales between 2022 and 2024.
The Strycula restaurant forecast represents another way to slice and dice the complex meat market. Wall Street analysts—and Beyond Meat—often refer to a $1.4 trillion market for protein, but that is a global figure that wraps in more price-sensitive emerging-market consumers.
The $8 billion represents about 5% of U.S. restaurant meat sales, meaning Strycula expects about $152 billion worth of animal protein will be consumed in restaurants in 2025. It’s a detail that offers a little more clarity about the market than has been available in many Wall Street reports to date.
That rate of penetration seems reasonable and sounds great for Beyond Meat. But the math highlights another problem: The company’s faux-meat products are so new and growth is so fast that all of Wall Street’s financial models feel like “fun with numbers.”
Strycula’s exercise was undertaken partly to justify his assumptions for long-term revenue growth. His financial model calls for more than 40% average annual revenue growth between 2020 and 2023.
He is convinced his targets are realistic, and the growth is impressive by any standard, but Strycula still doesn’t recommend the stock. He rates Beyond Metal at the equivalent of Hold, with a target for the stock price of $85. Shares were at $74.30 on Tuesday afternoon.
Other Wall Street analysts expect Beyond to grow even faster than Strycula does, but they are equally cautious about the stock. Only about one-quarter of analysts covering the company rate shares at Buy, worse than the 55% average Buy-rating ratio for stocks in the Dow Jones Industrial Average.
Valuation is still Wall Street’s main concern. The average packaged-food company trades for about three times sales over the past four quarters. Beyond Meat trades for almost 40 times.
Packaged-food stocks, not just Beyond Meat, aren’t very popular with Wall Street these days. About one-third of analysts covering packaged- food stocks in the S&P 500 rate the shares at Buy.
Barron’s wrote cautiously about Beyond Meat at the end of May, citing concern about the stock’s sky-high valuation. Since then, the shares have fallen almost 27%, but not before rising more than 131%. Barron’s, along with all investors, have been taken on a wild ride.
Write to Al Root at allen.root@dowjones.com
"Meat" - Google News
December 11, 2019 at 03:05AM
https://ift.tt/2E32AzB
Beyond Meat Has a Path to $1 Billion in Restaurant Sales - Barron's
"Meat" - Google News
https://ift.tt/2XaYM8n
Shoes Man Tutorial
Pos News Update
Meme Update
Korean Entertainment News
Japan News Update
Bagikan Berita Ini
0 Response to "Beyond Meat Has a Path to $1 Billion in Restaurant Sales - Barron's"
Post a Comment