With its upcoming earnings date not yet announced but likely to happen soon, Beyond Meat (NASDAQ:BYND) has been a hot discussion topic lately. However, not all of the talk about Beyond Meat stock has been positive.
One prominent analyst seems to have concerns about Beyond Meat’s competition in the meatless-meat niche. At the same time, some traders might be worried that the share price has accelerated too far, too soon.
Those are legitimate concerns, no doubt. On the other hand, forays into new geographic regions of the world could bode well for Beyond Meat. To get a complete picture and make a more informed decision, it’s important to examine both the price action of Beyond Meat stock and the growth prospects of the company itself.
A Closer Look at Beyond Meat Stock
So, we’ll start with the price action of Beyond Meat stock, which went public in May of 2019 at $25 per share. In hindsight, we now know that $25 would have been a terrific entry point for any investor. On Feb. 19 of this year, the stock price reached $126.
The novel-coronavirus crisis caused the share price to drop to the $54 area in March, but that decline was only temporary. In early June, the Beyond Meat stock price rebounded to $162.
The stock has retraced some of that rebound in July, but the bulls have generally been in control of the price action since Beyond Meat’s initial public offering. With the company likely to unveil its earnings report soon, some traders are wondering whether Beyond Meat’s impressive bull run can possibly continue.
An Analyst’s Warning
When Citi analyst Wendy Nicholson started covering Beyond Meat recently, her cautious stance was quickly made apparent. Specifically, Nicholson assigned a price target of $123 to Beyond Meat stock. On top of that, she started coverage of the shares with a “sell” rating.
Upon the release of Nicholson’s rating and price target, Beyond Meat’s shares dropped 6.7%. That just goes to show how influential the analysts of large banks can be sometimes. But is Nicholson’s apparently bearish stance justified?
Even while admitting Beyond Meat has a “well-known brand,” Nicholson expressed concern over intensifying competition in the plant-based meat-alternatives niche. The most obvious and direct competitor is Impossible Foods, whose stock is not public yet.
Mounting competition is a legitimate concern. Not only is Impossible Foods a threat, but huge corporations could threaten to encroach upon Beyond Meat’s market share.
Real Growth for Fake Meat
With the foregoing concerns in mind, the owners of the stock should remain somewhat cautious and monitor the firm’s competition closely. Going forward, market dynamics will determine whether Beyond Meat can maintain its firm foothold in the meatless-meats space.
A key component of those market dynamics is geographical diversity. Encouragingly, Beyond Meat has recently made it crystal clear that it’s ready and able to expand its presence beyond North America.
First, Beyond Meat just started selling its products at select Metro China locations in the city of Shanghai. Beyond Meat has significant potential in the Asian country, as Metro China, a popular grocer, has 97 locations across 60 Chinese cities.
In addition, Beyond Meat recently announced its entrance into the Brazilian market. Through the company’s collaboration with grocer St. Marche, Beyond Meat will sell four of its items in 19 Sao Paulo-based stores.
In its announcement, Beyond Meat stated: “As the third largest market in the world in terms of animal meat consumption, Brazil offers significant opportunity for plant-based meat adoption.”
The Bottom Line
With these moves into the Chinese and Brazilian markets, there’s no question that Beyond Meat remains poised for significant growth. It will face competition, but Beyond Meat’s growth should outpace any imminent market-share threats.
As of this writing, David Moadel did not hold a position in any of the aforementioned securities.
