Beyond Meat patties in a grocery cart
Source: Beyond Meat Facebook

Buying the Dip on Beyond Meat (BYND) Stock Is a Risky Move

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May. 7 2021, Published 9:14 a.m. ET

On May 7, Beyond Meat (BYND) stock fell more than 7 percent after the company reported its first-quarter earnings results. Investors were disappointed because the company missed analysts' revenue estimates and posted wider-than-expected net losses in the quarter. BYND stock has fallen nearly 5 percent this year and has underperformed the S&P 500 by a wide margin. What's BYND’s stock forecast, and should you buy it on a dip?

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Beyond Meat is a producer of plant-based meat substitutes. The company reported net losses in the first quarter. Restaurant customers are taking longer to return and grocery shoppers aren't stockpiling meat alternatives. This was the third consecutive quarter that Beyond Meat posted a wider-than-expected loss.

should buy beyond meat bynd stock on dip
Source: Beyond Meat Facebook
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Beyond Meat stock falls after Q1 2021 earnings report

Beyond Meat reported an adjusted EPS of -$0.42, compared to $0.05 in the prior-year period. The adjusted EPS missed analysts’ average estimate of -$0.19. The company generated sales of $108.2 million in the first quarter, which marked an 11 percent rise YoY. However, Beyond Meat missed analysts’ average sales estimate of $112.6 million.

U.S. retail sales jumped by 28 percent YoY in the first quarter, while U.S. foodservice sales dropped by 26 percent. The company said that the COVID-19 pandemic continued to impact its foodservice business. For the second quarter, Beyond Meat expects to generate net revenues in the range of $135 million to $150 million, which represents 19 percent growth to 32 percent YoY.

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Beyond Meat’s stock valuation

Beyond Meat went public in May 2019 through the traditional IPO process. The company was valued at $1.5 billion when its IPO was priced at $25. At its current stock price, Beyond Meat’s market capitalization has ballooned to $7.5 billion.

should buy beyond meat bynd stock on dip
Source: Koyfin

BYND Stock Price

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Is Beyond Meat stock undervalued?

Beyond Meat trades at a next-12-month EV-to-sales multiple of 11.8x, which looks overvalued. Conagra Brands (CAG) and Hormel Foods (HRL) have multiples of 2.6x and 2.5x, respectively.

Beyond Meat’s stock forecast

According to Market Beat, analysts' average target price is $124.76 for BYND stock, which is 5 percent above its current price. Among the 18 analysts tracking BYND, three recommend a buy, eight recommend a hold, and seven recommend a sell. Their highest target price of $190 is 60 percent above the stock's current price, while their lowest target price of $77 is 35 percent below.

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On May 7, Piper Sandler reduced its target price on BYND stock to $120 from $125 and maintained a neutral rating on the stock. In a research note, the analyst said that Beyond Meat’s distribution momentum is slower than expected. The analyst expects higher investment spending going forward.

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Beyond Meat stock isn't a good buy.

Beyond Meat doesn’t look like a good buy now because of high valuations. The competition in alternative protein is rising and is coming from well-established food companies like Tyson Foods, Impossible Foods, and Hormel. Beyond faces uncertainty due to the COVID-19 pandemic.

Best price to buy Beyond Meat stock

Beyond Meat is trading at a 46 percent discount to its 52-week peak of $221. Analysts' average price forecast suggests that BYND stock has a minimal upside potential. It looks best to buy under $100.

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