“The End of Meat Is Here,” proclaimed Jonathan Safran Foer’s controversial New York Times op-ed piece. That attention-getter of a title may be an exaggeration, but the novel pandemic has forced many consumers to reconsider their eating habits. And with this come profound implications for Beyond Meat (NASDAQ:BYND) stock.
A migration toward meatless-eating options is, for many market participants, an unexpected consequence of the lockdowns. Could this drive higher prices in BYND stock? The potential is certainly there as the shift towards plant-based foods, accelerated by the novel coronavirus, may just be starting.
In truth, you don’t even have to believe that the “end of meat” is here or even near. An appreciation for the rapid, and possibly permanent, changes in consumer preferences ought to a compelling enough argument in favor of owning BYND stock.
A Hunger for Alternative Food Choices
Judging by this year’s price action in BYND stock, the company wasn’t entirely immune to the fiscal damage of the coronavirus. Indeed, starting on Feb. 18, the share price was halved within a month’s time.
However, for patient BYND shareholders at least, the crisis turned out to be short-lived. The stockholders promptly recovered all of their losses and went into the green by the middle of May.
It’s important to note the timing of that sequence of events. Mid-May was a time when the broader stock market was crashing and the American consumer was in a panicked state. Job losses, empty store shelves and shelter-in-place mandates kept folks from enjoying pricey foods.
But somehow, none of this dissuaded people from eating plant-based foods, which aren’t exactly the cheapest food items available. And by April, meatless food items were practically flying off the shelves.
That might strike you as counterintuitive, but the numbers don’t lie. Data from Nielsen indicated a staggering year-over-year increase of 224.3% in the sales of “fresh meat alternatives” during the week that ended on April 25.
Less Meat, More Profits
Meanwhile, data technology company SPINS and the Plant Based Foods Association observed a major plant-based foods boom during the peak of the Covid-19 crisis. If you can believe it, mid-March sales of plant-based foods increased by 90% year-over-year.
And the momentum didn’t stop there. Over the next four weeks, total sales of plant-based foods grew by 27%. That’s a 35% faster growth rate compared to the growth rate of retail foods generally during that time.
Tony Olson, the owner and CEO of SPINS, fully expects this momentum to persist. “Our data shows, the plant-based meat boom of last year continues and as reports of animal-based meat shortages increase, we can expect plant-based meat to gain even more traction,” he said.
Prospective investors in BYND stock should heed Olson’s prediction. Meat shortages, while unfortunate for the agricultural industry, could provide a strong headwind.
Julie Emmett, the senior director of retail partnerships at the Plant Based Foods Association, suggested that the plant-based-foods explosion is far from over. “Even after the highest panic-buying period, plant-based foods growth remains strong, proving that this industry has staying power,” she said.
BTIG analyst Peter Saleh seems to concur with Emmett’s optimistic outlook. Citing Beyond Meat’s “really strong demand,” Saleh initiated his coverage of BYND stock with a rating of “buy.” He also assigned the shares a $173 price target, thereby suggesting considerable upside.
Saleh also made an interesting point that Beyond Meat still has room to penetrate into the American middle-state consumer markets. If he’s right about that, then BYND stock could actually present a strong value proposition even at elevated prices.
The Takeaway on BYND Stock
Investors can, and perhaps ought to, sidestep the debate over whether the “end of meat” is actually upon us. It’ll be much easier to just follow the data, note the trend towards meatless-food options, and enjoy robust profits with BYND stock.
As of this writing, David Moadel did not hold a position in any of the aforementioned securities.