BYND’s valuation multiple
As of June 25, the day before Beyond Meat (BYND) launched its new Beyond Beef product, Beyond Meat was trading at a forward EV-to-sales multiple of 32.19x. In comparison, peers, Tyson Foods (TSN), Conagra Brands (CAG), and General Mills (GIS) were trading at a forward EV-to-sales multiple of 0.93x, 2.29x, and 2.75x, respectively.
For our analysis, we use the forward enterprise value-to-sales multiple as Beyond Meat (BYND) is still in the growth phase of its business cycle. Because the company is expected to incur high expenses, we can’t consider its earnings in our valuation.
Nielsen data indicated that Beyond Meat had penetrated only 2% of US households. The company’s international sales formed accounted for just 7% of its total revenue in 2018. So the company has enormous scope for expansion. With its innovative plant-based products, BYND is focusing on competing against a $1.4 trillion global meat industry. BYND’s scope for expansion appeals highly to investors, allowing the stock to trade at a higher valuation multiple.
Since Beyond Meat reported its first-quarter earnings on June 6, JPMorgan Chase, Jefferies, and Credit Suisse have all raised their price targets.
JPMorgan Chase hiked its price target from $97 to $120, Credit Suisse from $70 to $125, and Jefferies from $85 to $105.
However, on June 11, JPMorgan Chase downgraded the stock to “neutral” from “overweight” while maintaining its price target at $120.
As of June 25, the eight analysts who follow the stock have a “hold” rating and a price target of $103.50, which implies a fall of 31.3% from the current stock price of $150.60.