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.
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.
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).
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.