Beyond Meat Posts Mixed 4Q Results; Street Says Hold

Beyond Meat reported a mixed bag of results on Feb. 25. The plant-based meat company reported an adjusted net loss per share in 4Q of $0.34, which widened from an adjusted net loss per share of $0.01 in 4Q FY19. Analysts were expecting an adjusted net loss per share of $0.13. Revenue for the quarter came in at $101.9 million, up by 3.5% year-on-year but falling short of the $103.2 million consensus estimate.

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Beyond Meat (BYND) President and CEO Ethan Brown said, “For the full year, we grew total net revenues 37%, with sales to retail customers more than doubling versus the prior year.”

“Although weakened foodservice demand resulting from the global pandemic has impacted our near-term profitability, we continue to press forward with strategic investments in service of our future growth, including the build out of our production facilities in China and Europe, bolstering our research and development capabilities, amplifying our marketing voice, upgrading our IT infrastructure, and, importantly, continuing to build out talented teams across the globe to bring our ambitious goals to fruition,” Brown added.

The growth in revenues was largely driven by increased sales through the company’s retail channels as sales through the foodservice channels continued to bear the brunt of COVID-19. (See Beyond Meat stock analysis on TipRanks)

Separately, the company also announced a strategic agreement with McDonald’s Corp and Yum! Brands. BYND’s strategic agreement with McDonald’s will be for a period of three years. As part of this agreement, BYND will be the preferred supplier for McDonald’s McPlant, a plant-based burger that is being tested in select markets. The agreement will also result in the companies exploring plant-based meat options for chicken, pork, and eggs as part of the McPlant platform.

Yum! Brands own brands like KFC, Pizza Hut, and Taco Bell and will partner with Beyond Meat over the course of several years to create a plant-based meat menu that will only be available at Yum! Brands’ quick-service restaurants (QSRs).

BYND did not provide any financial guidance for FY21 as due to the COVID-19 pandemic, many restaurants are operating at restricted capacity or are closed, resulting in a significant reduction in demand for BYND’s products.

Following the earnings announcement, Oppenheimer analyst Rupesh Parikh reiterated a Hold on the stock. Parikh said, “Forward commentary also appeared fairly negative on both the moderation at retail and foodservice headwinds. Management also announced new partnerships with McDonalds and YUM, which would normally represent a positive catalyst for the story. However, challenging sales and profit trends, in our view, offset the longer-term potential related to these partnerships.”

“Given a still lofty valuation and a weakening fundamental backdrop, we believe investors should remain on the sidelines. We continue to be optimistic that a post COVID-19 environment coupled with recent partnerships could lead to improved fundamentals down the road,” Parikh added.

The rest of the Street is sidelined on the stock with a Hold consensus rating based on 1 Buy, 7 Holds, and 3 Sells. The average analyst price target of $139.40 implies around 3% downside potential to current levels.