Beyond Meat stock tumbles as analysts worry about its long-term growth

On this photograph illustration, packages of Past Meat “The Past Burger” sit on a desk, June 13, 2019 in New York Metropolis.

Drew Angerer | Getty Photos

Beyond Meat’s inventory cratered 17% in premarket buying and selling Thursday as Wall Avenue voiced doubts over the corporate’s development prospects.

The plant-based meat maker reported disappointing third-quarter results after the bell on Wednesday. Its loss was wider than anticipated, whereas income fell in need of expectations, even after a warning from the corporate final month. Past additionally issued a dark outlook that indicated gross sales would not snap again instantly.

Jefferies known as it “the quarter that seemingly broke the camel’s again.” Bernstein analyst Alexia Howard downgraded the stock, telling buyers to not purchase the dip.

“We view the outcomes as additional proof that Past’s enterprise is reaching market saturation quicker than anticipated and that the corporate has deeper issues that will not be simple to repair,” Credit score Suisse analyst Robert Moskow wrote in a word.

Past blamed plenty of components for its weak quarter, together with extreme climate, the delta variant and eating places’ labor challenges. CEO Ethan Brown informed buyers that the issues have been largely brief time period.

Nonetheless, analysts are extra skeptical. J.P. Morgan’s Ken Goldman quoted Maple Leaf Foods CEO Michael McCain, who informed buyers final week that the corporate is seeing a “marked slowdown” within the plant-based protein class, which may recommend a shift from the excessive development charges anticipated by the business.

“We’re not but certain who is correct – Past Meat or Maple Leaf Meals – however once we hear commentary like this, it is exhausting to be fully assured about the way forward for the class,” Goldman wrote.

Brown additionally mentioned Wednesday night that he is optimistic about 2022. However the firm hasn’t satisfied analysts that is true. Financial institution of America Securities analyst Bryan Spillane wrote in a word that subsequent 12 months’s outcomes will rely closely on the launch of McDonald’s McPlant burger and its partnerships with different nationwide chains, like Yum Brands’ Pizza Hut. McDonald’s is currently conducting an operational test of the McPlant in a handful of U.S. eating places and has begun promoting the burger in just a few worldwide markets.

Spillane additionally mentioned an space of concern is that U.S. trial and demand of meat options has slowed, notably in grocery shops.

Jefferies analyst Rob Dickerson predicted the inventory will seemingly stay beneath stress till there’s a higher understanding of plant-based meat’s long-term improvement, consumption charges and the aggressive panorama. Together with Thursday’s tumble, shares of Past have slid 38% this 12 months, giving it a market worth of $4.88 billion.

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