Beyond Meat Stock Skyrockets as Both the Results and the Forecast Provide a “Positive Surprise”

Beyond Meat Stock

Beyond Meat Stock (NASDAQ:BYND)

On Friday,  Beyond Meat stock (NASDAQ:BYND) increased by more than 20% after the company, which manufactures plant-based meat alternatives, reported its results for the fourth quarter and provided a financial forecast that an analyst referred to as “a positive surprise. 

Even though consumer demand was decreasing and prices were going down, Beyond Meat was still able to report better-than-expected sales for the fourth quarter on Thursday.  According to FactSet, industry analysts were expecting Beyond Meat (ticker: BYND) to report a loss of $1.18 per share and revenue of $75.8 million on Thursday, but the company instead reported a loss of $1.05 per share and net revenue of $79.9 million.

The manufacturer of plant-based burgers, sausages, nuggets, and other products, with headquarters in El Segundo, California, reported that its sales volumes continued to decline despite price cuts in both the United States and Europe.  According to the company, the strong dollar also hurt profits from overseas markets.

In addition, the company forecasted that the company’s annual net revenue will range between $375 million and $415 million in 2023, whereas market analysts had estimated $395.2 million. 

Ethan Brown, President, and Chief Executive Officer of Beyond Meat stated that the company is making headway in its efforts to reduce costs and simplify the manufacturing process. In October, Beyond Meat eliminated 200 jobs, which is equivalent to 19% of its workforce, and reduced the number of contract manufacturers it works with within North America from eight to three.  In addition to this, inventory was decreased.

As consumers faced overall inflation at the grocery store in 2017, there was a general slowdown in demand for fresh plant-based meats such as burger patties and sausages.  One of the reasons for this was the high prices that these products commanded. According to NielsenIQ, sales of fresh meat alternatives in the United States dropped by 11% in 2022, completely offsetting the 11% gain they had seen in 2021. Although he wrote that “the print/manual changed into a fantastic surprise,” and regardless of the truth that he expects expectancies for 2023 profits to tick higher, J.P. Morgan analyst Ken Goldman maintained an Underweight rating on the stock and recommended that investors sell it. He praised the business enterprise for being greater disciplined with spending, however, he additionally delivered up the fact that sales have been declining continuously and that gross margins have not improved. 

According to a research note written by Goldman, “With a capital raise likely ahead, no real indication that consumer demand For the product is recovering, and steerage that we do not view as conservative, we stay snug with our Underweight rating.

On Friday, an analyst working for Mizuho Securities named John Baumgartner gave Beyond Meat a “cautiously optimistic” thumbs-up and raised his price target on the company’s stock from $11 to $20.  He said this move was in response to the company’s “solid fundamentals. He improved his profits forecast for the 12 months of 2023 and introduced that he was “greater assured gross margin can hold sequential improvement.

On Friday, Beyond Meat stock increased by 23.3% to a price of $21.13.

Baumgartner said that they believe that the management has prudently narrowed its ambitions and activities are more likely to help a multi-year sales boom relative to what we’ve got visible over the last 3 years. 

Beyond Meat had previously warned investors that inflation was taking a toll on the company’s performance, as consumers were gravitating toward cheaper meats in the face of rising costs. Inflation is a term that refers to an increase in the general price level of goods and services. The company emphasized that this situation will not improve anytime soon.

According to the company, Beyond Meat is facing a growing amount of competition in the market for plant-based meat alternatives, as well as disruptions in its supply chain and challenges related to the availability of labor.

Analyst Jon Andersen from William Blair was also optimistic about the performance of the company. He wrote in studies to be aware that “control has pivoted from an increase at any price to coins go with the drift with a watch in the direction of worthwhile increase. The rating that he has given the stock is Market Perform.

Increasing profit margins, lowering operating costs, reducing inventory, and “selectively supporting the most important strategic partner opportunities” are some examples of initiatives that illustrate this mindset, as he wrote. 

According to the company, rising inflation in the cost of groceries and fears of a recession could have a negative impact on sales in the first half of the year, but the company anticipates some improvement as the year continues. 

Featured Image: Megapixl © Rafaelhenriquepress

Please See Disclaimer