Why Did Beyond Meat Stock Fall on Thursday?

In September, McDonald’s (NYSE:MCD) introduced two burgers on a trial basis in a few restaurants in southwestern Ohio. The burgers were made from Beyond Meat’s (NASDAQ:BYND) plant-based patties. The company called them “PLT burgers,” which stands for plant, lettuce, and tomato. The trial period ended in April. On Thursday, CBC News reported that McDonald’s removed all of the information on the burger from its website. According to CBC News, McDonald’s didn’t provide an update on the PLT burger.

In a mailed reply to CBC News, a McDonald’s spokesperson said, “We’re evaluating learnings from our recent test to inform future menu options. As we look ahead, we will plan to bring plant-based options to the menu at the right time for customers in individual markets.”

The lack of progress in the partnership between Beyond Meat and McDonald’s might have made investors skeptical. On Thursday, Beyond Meat stock fell to a low of $136 before closing at $145.35—a decline of 4% from the previous day’s closing price. If Beyond Meat loses McDonald’s, it would be its second major setback in June. Earlier this month, Starbucks (NASDAQ:SBUX) choose Impossible Foods to introduce a breakfast sandwich in the US. Starbucks partnered with Beyond Meat to introduce a plant-based sandwich in China and Canada.

Beyond Meat’s YTD stock performance

Despite the fall on Thursday, Beyond Meat was trading over 200% up from its March lows. YTD, the company has returned 92.3% and outperformed the broader equity markets and its peers. During the same period, the S&P 500 Index has declined by 4.6%. Meanwhile, Tyson Foods (NYSE:TSN) and Kellogg (NYSE:K) have fallen by 34.2%, and 5.3%, respectively. The strong first-quarter performance and aggressive expansion led to a rise in Beyond Meat’s stock price. Last week, the company introduced affordable burgers in the US market.

Analysts’ expectations and recommendations

Analysts expect Beyond Meat to report revenue of $460.2 million in 2020 and $705.5 million in 2021. These expectations represent year-over-year growth of 54.5% in this year and 53.3% in the next year. They also expect the company’s EPS to rise at a faster pace. Analysts expect Beyond Meat’s EPS to rise by 149% in 2020 to $0.14 and by 325% in 2021 to $0.61.

Overall, Wall Street favors a “hold” rating for the stock. Among the 19 analysts, 47.4% recommend a “hold,” 26.3% recommend a “buy,” and 26.3% recommend a “sell.” As of June 25, analysts’ consensus target price was $99.42. The target price represents a fall of 31.6% from its current stock price. Earlier this month, Credit Suisse raised its target price from $90 to $142.