Last month, Bernstein downgraded Beyond Meat to a buy-equivalent rating on "stretched valuation"
Beyond Meat (BYND) is scheduled to report results of its third fiscal quarter after the market close on Monday, November 9, with a conference call scheduled for 4:30 pm ET. What to watch for:
1. STRETCHED VALUATION: Last month, Bernstein analyst Alexia Howard downgraded Beyond Meat to Underperform from Market Perform with a price target of $136. The analyst noted that the shares had rallied on headlines such as the rollout of Beyond Meatballs and Sausage Links, distribution gains at Walmart (WMT), as well as reports about a potential partnership between Beyond Meat and McDonald's (MCD) in the U.K. While these new developments are "incrementally positive" and Beyond's longer-term outlook "remains solid," the stock's valuation is "stretched" at 20-times enterprise value to next 12 months sales, Howard said. The analyst believes a fair multiple is in the 8 to 10-times range. Further, Beyond Meat's sales growth in the retail channel has slowed while its foodservice sales remain under pressure, she added.
2. ROOM FOR INCREASED PENETRATION: Baird analyst Ben Kallo said that his recent consumer sentiment survey aimed at gauging sentiment trends toward Beyond Meat and plant-based based proteins suggests there is significant headroom for increased penetration of plant-based proteins, and respondents were open to future purchases of protein alternatives. Kallo reiterated his Outperform rating and a price target of $160 on Beyond Meat shares.
3. BREAKFAST SAUSAGE LINKS: Back on October 8, Beyond Meat announced the addition of Beyond Breakfast Sausage Links to its line of plant-based meat offerings. The company said the Beyond Breakfast Sausage Links would roll into grocery stores nationwide, including at select Kroger (KR), Albertsons (ACI), Sprouts (SFM), Harris Teeter, Wegmans, Whole Foods Market (AMZN) and more.
4. WALMART DISTRIBUTION EXPANSION: Beyond Meat announced in September a major expansion in its relationship with Walmart. The company said that this fall, Walmart plans to triple availability of the Beyond Burger from approximately 800 locations to more than 2,400 stores nationwide.
Beyond Meat first launched its frozen products at Walmart in 2015. Since then, Walmart has expanded its Beyond Meat in-store offerings to include the Beyond Burger and Beyond Sausage in the fresh meat aisle and most recently, the Beyond Breakfast Sausage patties in the freezer aisle, the company noted.
5. MCDONALD'S PLANS FOR PLANT BURGER: On Monday, shares of Beyond Meat were under pressure after McDonald's announced plans to develop its own line of plant-based burgers.