Despite making a splash when it first came to market, Beyond Meat (NASDAQ:BYND) has seen a notable decline in its market share and continues to struggle for its place within the meat alternative category, which peaked in mid-2021. The stock has lost 95% of its value over the past three years. The first quarter reflected the gravity of the situation with an 18% drop in revenue and persistent net losses of $54.4 million.
Although there was a temporary boost from the recent meme stocks surge, the key problems persist. The stock is richly valued with highly unpredictable outcomes, making Beyond Meat a risky investment with little identifiable upside.
Beyond Meat Launches New Product
Beyond Meat is a pioneer in the plant-based meat industry and offers a range of unique plant-based meat substitutes.
Looking at the alternative meat industry, sales have steadily declined from their peak in 2019. Beyond Meat has recognized the challenge it faces in changing consumer perceptions regarding the appeal of plant-based meats and has made strides to tackle the taste and texture of products.
Management is still optimistic about a recovery in demand based on upcoming product improvements, specifically the fourth versions of their Beyond Burger and Beyond Beef products. CEO Ethan Brown stated that these new products will be featured in their 2024 marketing program.
Beyond Meat’s Recent Financials & Outlook
The company recently reported financial results for the first quarter of 2024. Net revenues of $75.6 million marked a year-over-year decrease of 18.0% from $92.2 million. This drop is primarily attributed to a 16.1% reduction in product sales volume and a 2.3% decrease in net revenue per pound. Earnings per share (EPS) of -$0.84 also fell short of analyst estimates of -$0.67.
The company’s cash and cash equivalents balance was $173.5 million, while the total outstanding debt was approximately $1.1 billion as of March 30, 2024. The net cash used in operating activities was $31.8 million, a decrease from $42.2 million in the same period of the previous year. The firm expended $1.2 million on capital investments over the quarter, a significant drop from the $5.3 million spent in the same period of the previous year.
Management remains optimistic about the rest of the year. It projects net revenues between $315 million and $345 million, with gross margins expected to be in the mid- to- high teens range.
What Is the Price Target for BYND?
Analysts following the company have taken a bearish stance on the stock. For example, analyst John Baumgartner of Mizuho Securities recently reiterated a Sell rating for the shares with a price target of $6.00. He noted that first-quarter revenue showed a sizeable year-on-year decline, raising doubts about new products significantly boosting sales. Also, he reflected on a potentially unstable financial situation that may affect investor sentiment.
Beyond Meat is rated a Moderate Sell based on the aggregate ratings and price targets from eight analysts issued over the past three months. The average price target for BYND stock is $5.64, representing a potential downside of -15.19% from current levels.
The stock has been on a long-term downward trend that has persisted into this year. It is down over 20% year-to-date and trades at the low end of its 52-week price range of $5.58 – $19.25, demonstrating ongoing negative price momentum trading below the 20-day (7.26) and 50-day (7.34) moving averages. Despite the prolonged slide in share price, the stock still trades at a premium, with a P/S ratio of 1.39x, north of the Packed Foods industry average of 0.97x.
Bottom Line on BYND
Beyond Meat’s persistent challenges have steadily driven the stock price down over the past few years and show no signs of turning around. Despite optimism from management regarding new product launches and recovery in demand, analysts remain primarily bearish, forecasting potential further downside for the stock. Trading at a premium, Beyond Meat currently presents a highly unpredictable investment landscape with limited upside potential.
