Beyond Meat (BYND) Reports Weak Q4 But Gains on Deals with McDonald's (MCD) and Yum (YUM), Analyst Encouraged but Don't Expect Impact Before 2022

February 26, 2021 9:44 AM EST
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Price: $134.52 -2.03%

Rating Summary:
    5 Buy, 10 Hold, 9 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 18 | Down: 20 | New: 68
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Beyond Meat (NASDAQ: BYND) reported weaker-than-expected earnings for the fourth quarter but shares still gained on two major deals announced with McDonald’s (NYSE: MCD) and Yum! Brands (NYSE: YUM).

BYND reported a loss of $0.34 per share, worse than the $0.13 expected from market analysts. Revenue came in at $101.9 million, again lower than the Street’s expectations of $103.2 million. The company also declined to provide an outlook for 2021.

"I am proud of our 2020 achievements in light of the significant challenges we faced, primarily in our foodservice channel, as a result of the COVID-19 pandemic. For the full year, we grew total net revenues 37%, with sales to retail customers more than doubling versus the prior year,” Beyond Meat President and CEO Ethan Brown.

BYND stock erupted over 8% in pre-open Friday after the company made its partnerships with MCD and YUM official. BYND and MCD agreed to a 3-year deal that will see the former become McDonald’s preferred supplier for the patty in the McPlant, a new plant-based burger being tested in select McDonald’s markets globally.

Furthermore, two companies committed to explore co-developing other plant-based menu items – like plant-based options for chicken, pork and egg – as part of McDonald’s broader McPlant platform.

“Our new McPlant platform is all about giving customers more choices when they visit McDonald’s,” said Francesca DeBiase, McDonald’s Executive Vice President and Chief Supply Chain Officer. “We’re excited to work with Beyond Meat to drive innovation in this space, and entering into this strategic agreement is an important step on our journey to bring delicious, high quality, plant-based menu items to our customers.”

Similarly, a deal with YUM will be focused on creating “craveable and innovative plant-based protein menu items” for products at KFC, Pizza Hut and Taco Bell.

“KFC was the first national U.S. quick-service restaurant to introduce plant-based chicken when it tested Beyond Fried Chicken™ at an Atlanta-area restaurant in 2019. Since the initial rollout, KFC has expanded testing of Beyond Fried Chicken in other U.S. cities. In 2020, Pizza Hut U.S. launched the Beyond Italian Sausage Pizza and the Great Beyond Pizza nationwide, becoming the first national pizza chain to introduce a plant-based meat pizza coast-to-coast,” it is said in the joint statement.

BTIG analyst Peter Saleh found two deals more important than the weaker-than-expected earnings report, explaining a surge in BYND price action today.

“While the announcements themselves are encouraging, we don't anticipate much revenue from these partnerships in 2021, as the domestic quick service industry remains focused on core menu items and chicken, rather than plant-based meat. We believe investors will need to have faith that the ramping investment spend will bear fruit with these partnerships in 2022 and beyond,” Saleh said in today’s note.

The analyst rates BYND with a “Neutral” rating.



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