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Beyond Meat stock gets a boost after JP Morgan analyst finds it “appealing”

Several factors have worked in favor of alternative meat company Beyond Meat (NASDAQ: BYND) this year. The bullish sentiment was visible in the performance of the stock that reached a peak ahead of last month’s earnings report, before retreating to the pre-boom levels in the following weeks. The growing popularity of the plant-based fast food items offered by the company has helped it forge strategic partnerships with some of the leading restaurant chains.

Beyond Meat’s shares gained about 7% early Tuesday after being upgraded by JP Morgan (JPM) from neutral to overweight. The analyst also raised the target price by one dollar to $189, impressed by the renewed strength of the stock. According to the analyst, since the stock is reasonably priced now, investors will be interested in it.

Beyond Meat Financial Summary for 2Q19

The fact that the Los Angeles, California-based firm is on an expansion spree justifies the upbeat outlook. And, the steady uptick in the top-line performance hints at an earlier turnaround than initially expected. It is estimated that the management would raise full-year guidance, taking a cue from the improved cash flow. While anticipating further improvement in valuation, the analyst sees solid customer growth in the near term.

Related: Beyond Meat Q2 2019 Earnings Call Transcript

Though Beyond Meat had a dream run at the bourses soon after going public in May, the trend got reversed when it reported a wider-than-expected loss for the second quarter. The decline accelerated at the beginning of August when the management priced the secondary offering.

Though revenues surged to $67.3 million in the second quarter from $17.4 million a year ago, net loss widened to $0.24 per share and missed Wall Street’s prediction. The top-line benefitted from robust sales at the retail, restaurant and foodservice channels. Beyond Meat is currently in partnership with leading food companies like Del Taco Restaurants (TACO) and Dunkin Brands (DNKN).

Also see: McDonald’s Q2 earnings meet estimates

Experts believe that the growing demand for meat substitute in the US will boost sales in the coming years. A report from Barclays recently showed that the market for plant-based meat will reach around $140 billion in the next ten years.

The value of Beyond Meat’s shares more than doubled since the IPO. The stock gained sharply during premarket trading Tuesday, after closing the previous session lower.

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Sea Limited’s Q2 loss widens on higher expenses

The Singapore-based firm Sea Limited (NYSE: SE) reported its second quarter 2019 results today. The online media and e-commerce company’s loss widened in the recently ended quarter to $280 million from $251 million in the second quarter of 2018. Revenue on an unadjusted basis, jumped 137% year-over-year to $436 million.

Sea stock, which reached its 52-week high ($38.00) in early August, was down more than 10% in the pre-market trading hours and was down 10% when the market opened today.

Net loss, excluding share-based compensation and changes in fair value of the 2017 convertible notes, was $215.1 million and $198.7 million in the second quarter of 2019 and 2018, respectively. Adjusted revenue increased by 203% to $665.4 million in the second quarter of 2019 from $219.6 million in the prior-year quarter.

Read: iQiyi (IQ) stock plunges after reporting Q2 results

Total expenses in the quarter increased 46% to $332 million. Digital Entertainment segment’s revenue surged 112% and 219%, on an unadjusted basis and adjusted basis, respectively. This increase was due to the growth in the active user base as well as the deepened paying user penetration. E-commerce and other services segment revenue jumped more than 200%, both on unadjusted and adjusted basis.

For fiscal 2019, Sea lifted its adjusted revenue guidance. The company now expects adjusted revenue for digital entertainment segment to be between $1.6 billion and $1.7 billion, representing 142.0% to 157.2% growth from 2018. This compares to the previously disclosed guidance of between $1.2 billion and $1.3 billion, representing 81.5% to 96.7% growth.

Adjusted revenue for e-commerce segment is now expected to be between $780 million and $820 million, representing 168.3% to 182.1% growth from 2018. This compares to the previously disclosed guidance of between $630 million and $660 million, representing 116.7% to 127.0% growth.

SE stock had rallied about 220% so far this year and 166% in the past 52 weeks.

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