Beyond Meat, Inc.

BYND Details

Key Positives:

Strong Strategic Partnerships, Products Available in 130,000 retail outlets in 90 Countries, New Product Launches in the Current Quarter, Market Expansion for Better Consumer Reach, Positive Outlook for FY22.

Key Negatives:

Dependence on Third Parties, High Input Costs, High Debt Equity Ratio compared to Industry Median (27.60x in Q1 FY22 vs 0.53x) 

Beyond Meat, Inc. (NASDAQ: BYND) is a cutting-edge plant-based meat company with a portfolio of game-changing plant-based meats. It generates meat from plants, a breakthrough that allows consumers to enjoy the taste, texture, and other sensory qualities of popular animal-based meat products while reaping the nutritional and environmental benefits of eating our plant-based meat products.

Latest News

• Kim Kardashian Joins as Beyond Meat Ambassador: On May 24, 2022, the company announced that Kim Kardashian, a professional tastemaker, and businesswoman, will be featured in BYND's new campaign. Kim will use her unique recipes and engaging creative material to highlight the brand's tasty, nutritional, and sustainable product selection.
• Expands Nationwide Availability of Beyond Chicken: On April 12, 2022, BYND announced that its Beyond Chicken Tenders would be widely available in leading retail venues, including supermarkets, pharmacies, and club shops. Moreover, it will be accessible across all Kroger banners in April.
• New Products Launch: Beyond Meat launched the Beyond Burger and Beyond Meatballs at approximately 2,000 Rite Aid stores nationwide on April 7, 2022, to expand its category leadership by making delicious and nutritious plant-based meat options more accessible to even more consumers.

Q1 FY22 Results:

• Decent Topline Growth: In Q1 FY22, the company's net revenues climbed by 1.2% to USD 109.5 million, up from USD 108.2 million in Q1 FY21.
• Increased Bottom Line: In Q1 FY22, the company lost USD 100.5 million, compared to USD 27.3 million in Q1 FY21. In the first quarter of 2022, the net loss per common share was USD 1.58, up from USD 0.43.
• Liquidity Position and Capex Investments: As of April 2, 2022, the company's cash and cash equivalents balance was USD 547.9 million, while total outstanding debt was USD 1.1 billion. As of April 2, 2022, net cash utilized in operating operations was USD 165.2 million. Moreover, the Capex reached USD 21.5 million, reflecting the company's sustained investments in manufacturing equipment and facilities linked to capacity development and commercialization strategies.

Key Risks

• Dependence on Third Parties: BYND has committed to acquire minimum monthly and semi-annual amounts from one of its third-party pea protein suppliers. Any supply disruption might significantly negatively impact its business if it cannot quickly substitute pea protein or other essential components.
• Macro factors: Inflationary pricing pressures on raw materials, labour, transportation, fuel, and other inputs utilized by the company and the suppliers, as well as the consequences of rising interest rates, could harm the business's performance.

Reaffirming FY 2022 Guidance

• Revenue Estimates: The net revenues are estimated to be USD 560 million to USD 620 million in FY22, a 21 to 33% net increase compared to FY21.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

Source: REFINITIV, Analysis: Kalkine Group

Stock Recommendation

BYND can favourably address four rising global challenges by switching from animal-based meat to plant-based protein: human health, climate change, natural resource restrictions, and animal welfare. Beyond Meat's products were accessible in roughly 135,000 retail and food service establishments in over 90 countries as of March 2022. The stock price has fallen only 66.67% in the past six months and is currently leaning towards the lower side of its 52-week range of USD 160.28 to USD 20.50. The price has consolidated for some previous weeks and as can be seen price is making lows while the RSI is increasing, therefore a sign of bearish pressure losing momentum.

Considering the topline growth, FY22 Outlook, technical analysis, new products launch, associated risks, and current valuation. We recommend a "Speculative Buy" rating on the stock at the current price of USD 24.96 as of June 07, 2022.

1-year technical chart as of June 07, 2022, at 08:09 AM PDT. Source: REFINITIV. Analysis by Kalkine group

Technical Analysis Summary

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and the uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavorable movement in the stock prices.

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decisions should be made depending on the investors' appetite for upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting the stock if the Target Price mentioned as per the valuation has been achieved and subject to the factors discussed above. 

Note 3: The report publishing date is as per the Pacific Time Zone.