Goldman Sachs says Beyond Meat (BYND) stock could drop 60% on mounting challenges

November 23, 2022 9:27 AM EST
Get Alerts BYND Hot Sheet
Price: $14.31 -1.92%

Rating Summary:
    4 Buy, 14 Hold, 10 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 10 | Down: 28 | New: 30
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Goldman Sachs analyst Adam Samuelson lowered the price target on Beyond Meat (NASDAQ: BYND) stock to $5 per share from $12. This way, Goldman joined Bank of America analysts with a Street-low price target on the Sell-rated BYND stock.

While recent steps to improve focus on costs, margin, and cash flow are a “welcome strategic pivot by the company,” Samuelson believes the challenges facing the business are still “significant.” As a result, the company's goal of positive FCF in 2H23 is “a narrow one.”

“After significant disruption to its pre-pandemic growth strategy from COVID-induced lockdowns, BYND's 'Pathway to Profitability' dilemma is now exacerbated by broad-based inflation, weighing on consumer demand for higher-priced alternative protein. As such, cumulative investments in supply chain capacity have run against a sharp deceleration in demand, especially in the absence of additional large QSR roll-outs and successful product-line expansions in retail,” Samuelson said in a client note.

In order to get more positive on Beyond Meat stock, the analyst would like to see progress made in the following areas:

  1. Evidence that targeted promotional initiatives will yield real volume uptake;
  2. Significant improvement to unit-cost performance;
  3. Incremental marketing & promotional expenses necessary to drive volume growth do not undermine OpEx reduction efforts; and
  4. CapEx reductions neither diminish nor delay necessary internalization of capacity to improve unit profitability.

“Against an increasingly more difficult operating environment as well as a challenging backdrop for consumer demand, we remain skeptical of the company's ability to achieve the sizable reduction of internal production costs necessary to drive positive FCF generation in 2H23,” Samuelson concluded.

Beyond Meat stock is down over 80% year-to-date.

By Senad Karaahmetovic

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Goldman Sachs, BofA/Merrill Lynch, Senad Karaahmetovic