Barclays analyst Benjamin Theurer downgraded shares to equal weight from overweight, with a $25.00 per share price target, down from $80.00.
“Given limited short-term visibility, mounting cost pressure, and high cash burn, we downgrade BYND to EW and lower our price target to $25. 1Q results were disappointing and 2Q guidance was less upbeat than our previous estimates. For 2H22 we see sales growth reaccelerating, but margins to remain well below historic levels,” Theurer said in a note to clients.
The downgrade came after the El Segundo, California-headquartered company revealed lower-than-expected sales in the first three months of this year, in part because of demand for its restaurants declining as well as “cost-intensive measures” that were utilized to “support important strategic launches” such as its Beyond Meat Jerky.
The company said its revenue rose 1.2 percent to $109.5 million in the first three months to March, missing Wall Street’s forecast of $112 million.
While Beyond Meat said its retail sales in the United States jumped 6.9 percent in the quarter compared to the same period a year prior, this was mostly owing to the introduction of its Beyond Meat Jerky, a meatless jerky developed as part of a snack food partnership with PepsiCo.
Sales of its other products, including burgers and sausages, were lower than the year prior.
“The increase in U.S. retail channel net revenues was partially offset by decreases in U.S. foodservice and international retail and foodservice channel net revenues,” the company said.
However, investments in new products like the jerky also cut into the company’s profits, and it reported a net loss of $100.5 million for the quarter, up from a loss of $27.3 million in the same period last year, with a loss of $1.58 per share. Analysts had forecast a 97-cent loss.
Beyond Meat noted that it continues to be affected by rising inflation and interest rates, labor shortages, the COVID-19 pandemic and its impact on consumer behavior and demand, as well as supply chain issues, in part related to “recent geopolitical tensions.”
Beyond Meat President and CEO Ethan Brown said on Wednesday that the company had made “good progress” toward its goal of “building tomorrow’s global protein company.”
“Whether furthering strategic partnerships in the restaurant industry, the market success of our first product collaboration with PepsiCo, or the continued acclaim awarded to our products here in the U.S. and EU, we continue to lay a robust foundation for our long-term growth,” he said.
However, Brown noted that “the decisions we are making today in support of our long-run ambition have contributed to challenging near-term results, including a sizable though temporary reduction in gross margin as we took cost-intensive measures to support important strategic launches.”
Despite this, the firm is confident that it will continue to advance in its “mission” to “bring plant-based meats and their attendant health, climate, natural resource, and animal welfare benefits to consumers around the world.”
Beyond Meat’s shares fell 24 percent in after-hours trading on Wednesday and are currently at $21.86 per share.