In recent weeks Beyond Meat Inc. (NASDAQ:BYND) has been dealing with growing pessimism from analysts with an underperforming rating. The latest to join the list is Mickheil Omanadze of Exane BNP Paribas who began coverage on Beyond Meat with an underwhelming rating and price target of $70.
On Monday when the analyst initiated the coverage Beyond Meat shares shed 6%. Freedom Finance’s Erlan Abdikarimov who has been bearish about Beyond Meat stock has the second-lowest target price of $87.90.
Growing competition hurting Beyond Meat
The main reason behind this depressing price target is growing competition in the industry. Analysts indicate that although the plant-based meats industry will grow fast, the low entry barriers are negligible. This is challenging when trying to justify the stock.
Also, it seems like Beyond Meat stock could be overvalued based on its peers with value at around $9 billion which is 37 times more than Beyond Meat’s full-year revenue guidance. The valuation is high for a processed food company whose product could be a fad.
However, even if plant-based meat wasn’t a fad, growing competition in the industry is still a big challenge. There a proliferation of fake meat products in retails stores and grocery shelves which could hurt sales of Beyond Meat. Traditional food companies such as Kellogg (NYSE: K), Hormel Foods (NYSE: HRL), and Tyson Foods (NYSE: TSN) are also developing alternative meat to compete with Beyond Meat. Outside the food industry Kroger Co (NYSE: KR) already has its fake meat alternative.
Could Beyond Meat Have Its Sites Set On McDonald’s?
Omanadze raised his skepticism regarding the potential of Beyond Meat in the food industry. Major drivers of the company have been restaurant and food partnerships. Analysts have predicted that the stock could surge if the company secures a partnership with McDonald’s. Omanadze believes that in future branded burgers will not have a significant presence in the foodservice sector.
Another analyst Brian Holland of D.A. Davidson has given the stock an underperforming rating but with a higher target price of £130.
