Beyond Meat: What’s behind Berenberg’s Bullish Outlook?

Beyond Meat (BYND) stock rose 1.8% on November 14 after Berenberg initiated coverage on it with a “buy” rating. Berenberg gave it a price target of $100, which reflects a potential upside of about 24%. As per Berenberg’s analyst’s comments cited by StreetInsider, strengths such as innovation and brand awareness could help Beyond Meat build its share in the plant-based meat market.

Beyond Meat: Recent rating developments

Some analysts feel that the recent sell-off in Beyond Meat stock has created an opportunity to buy it at an attractive price point. Aside from Berenberg, Bernstein is also positive about the stock. On November 5, Bernstein upgraded the stock to an “outperform” from a “market perform” and kept its price target unchanged at $106. Bernstein believes that a partnership with McDonald’s (MCD) will significantly boost the sales of the alternative meat maker. McDonald’s has been testing its P.L.T. (plant, lettuce, and tomato) burger with Beyond Meat patties in certain locations in Canada.

Meanwhile, on November 8, UBS initiated coverage of Beyond Meat stock with a “neutral” rating with a price target of $85. UBS sees strong revenue growth opportunities for the company. However, it’s concerned that the company’s margins will suffer due to the growing competition in the plant-based meat space.

Competition steps up

Burger King has expanded its partnership with Beyond Meat’s rival, Impossible Foods, after finding success with the Impossible Whopper. Burger King is now adding three new burgers with Impossible patties at 180 US locations.

Beyond Meat is also facing competition from Tyson Foods (TSN). Tyson has doubled the retail distribution of its plant-based Raised & Rooted nuggets to more than 7,000 stores and expanded into the food-service channel. In June, it launched Aidells Whole Blends sausages and meatballs, which contain chicken and plant-based ingredients. Meanwhile, Kellogg is seeing growth in the fake-meat space with the launch of its Incogmeato plant-based burger patties, chicken tenders, and nuggets.

Beyond Meat is entering into several partnerships to expand rapidly. Recent collaborations include those with Subway, Yum! Brands’ KFC, Dunkin’ Brands, and Denny’s.

Will the stock rise further?

Beyond Meat stock has risen 22.3% since its IPO in May. On November 14, three out of 13 analysts rated the stock a “buy,” while two had “sell” ratings. Eight analysts had “hold” recommendations. With an average price target of $112, BYND has a potential upside of 39% over the next 12 months.

The stock fell 22.2% on October 29 despite reporting strong third-quarter results. It fell as a result of the expiration of its lockup period. Plus, the company announced that it would offer additional discounts, which reflected the impact of growing rivalry in the alternative meat market.

The company is poised to expand in the US and international markets. It now aims to start production in Asia by the end of 2020.