25 Jul

Dunkin’ Brands Enters the Plant-Based Meat Space

WRITTEN BY Rajiv Nanjapla

On July 24, Dunkin’ Brands (DNKN) announced that it had partnered with Beyond Meat (BYND) to introduce the Beyond Sausage Breakfast Sandwich to its menu. The breakfast menu item features a sausage patty made of 100% plant-based ingredients. For now, the company will serve the menu item in only 163 restaurants in Manhattan. However, it has plans to expand the item to all restaurants in the US in the future.

Dunkin’ Brands is the latest entrant into the plant-based meat space. In June, Tim Hortons of Restaurants Brand International announced that it would sell Beyond Meat Breakfast Sandwiches in 4,000 of its restaurants in Canada. Other companies TGI Friday’s, Del Taco Restaurants, and Carl’s Jr. are already serving customers with alternative meat products. In May, Barclays said that it expected the alternative meat market to reach $140 billion in the next decade.

Dunkin’ Brands Enters the Plant-Based Meat Space

Stock performance

Dunkin’ Brands’ entry into the alternative meat product market appears to have increased investors’ confidence. On July 25, its stock rose to a high of $82.0 before closing at $81.13, up 1.6% from its previous day’s close. On the same day, Beyond Meat’s stock price rose 3.8% to $202.92.

YTD (year-to-date), Dunkin’ Brands is up 26.5%. The company has outperformed the broader equity market, while the S&P 500 Index has risen 20.5% in the same period. Dunkin’ Brands’ peers Starbucks and McDonald’s have returned 40.8% and 19.8%, respectively, YTD.

On the other hand, Beyond Meat has been on a phenomenal run since its IPO in May. The company priced its IPO at $25. On July 24, its stock was up 711.7% from its IPO price.

Analysts’ expectations for Dunkin’ Brands

Analysts expect Dunkin’ Brands to report revenue of $1.37 billion in 2019. Year-over-year, they expect its revenue to rise 3.9% from $1.32 billion in 2018. During the same period, they expect its EPS to rise 3.3% to $3.0.

Analysts’ recommendations

Analysts favor “hold” recommendations on Dunkin’ Brands. Of the 28 analysts that follow the stock, 75% call it a “hold.” On average, analysts have given DNKN a 12-month price target of $77.47, a fall of 4.5% from its current price of $81.13.

On June 24, Wedbush upgraded the stock from “neutral” to “outperform.” It also raised its price target from $76 to $92. On June 25, Credit Suisse initiated coverage on Dunkin’ Brands with an “outperform” rating and a price target of $70.

Dunkin’ Brands’ peer Starbucks is scheduled to report its fiscal 2019 third-quarter earnings results on July 25 after the market closes. Read our earnings preview in Starbucks to Report Double-Digit EPS Growth in Q3.

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