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The impossible sausage, served as a croissant sandwich.
Courtesy of Burger King.
Beyond meat‘s
Impossible Foods is launching its fake sausage product in Burger King, a signal to investors that interest in alternative protein remains high and that competition within the burgeoning industry remains strong.
Burger King, owned by Restaurant Brands International (ticker: QSR), sells Impossible Whopper and will also sell Impossible Sausage. The Impossible Sausage will be available in Starbucks (SBUX) stores, as well as in the top 30 restaurants in the United States, according to Yelp’s ranking.
Beyond (BYND) shares fell more than 10% ahead of the announcement after Barclay analyst Benjamin Theurer, a lifelong bull, downgraded its Buy to Sell equivalent rating. By mid-afternoon, it was down 8% to $ 130.38.
Theurer does not believe that some of the coronavirus-induced trading difficulties associated with closing restaurants are adequately reflected in the stock price. Approximately half of Beyond Meat’s sales are made through the food service distribution channel and, of course, in many restaurants the pandemic has affected business.
The news about additional competition isn’t affecting as much as the downgrade and shouldn’t. The alternative meat industry is growing rapidly, so there will be room for some winners over time.
“Breeding animals for food constitutes the vast majority of humanity’s footprint,” the Impossible press release noted. “All buildings, roads, and paved surfaces in the world occupy less than 2% of the Earth’s land area, while more than 45% of the Earth’s land area is currently used as land for grazing or feed cultivation for cattle. ”
That is one reason why Impossible believes that growth will continue rapidly. They believe that vegetable-based protein is more sustainable because the less meat people eat, the fewer animals are needed to feed them.
However, Wall Street still has questions. With Theurer’s new sale rating, only three analysts rate Beyond’s shares in Buy, while 17 have Hold or Sell ratings. The 15% buy rating ratio is well below the 55% average for stocks on the Dow Jones Industrial Average.
Valuation seems to be the main reason for the large percentage of pans. The average price target among analysts is approximately $ 100 per share, almost 30% below recent trading levels.
Barron’s He also struggles with Beyond’s rating. We analyzed the shares in May 2019, believing the price was too rich, while acknowledging the company’s ability to follow through on its business plans. Beyond’s shares are currently trading approximately 13 times more, above where other high-growth food companies have traded in the recent past.
Other food stocks in the S&P 500 trade for just over double the sales on average. Those companies, of course, grow much more slowly than Beyond.
Since the 2019 article appeared, with the stock price at about $ 100, Barron’s has looked smart and stupid. Shares have ranged from around $ 50 to $ 240. At the close of business on Friday, Beyond shares are up approximately 87% so far this year.
Write to Al Root at [email protected]
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