Beyond Meat Slumps in Sign of Investors’ Jitters Over Earnings
(Bloomberg) -- Beyond Meat Inc. bulls signaled they are getting nervous as shares of the faux meat maker fell as much as 14% Monday before trimming losses ahead of second-quarter earnings, which are due after the close.
While Wall Street sees the company’s full-year revenue guidance as conservative -- with the average estimate compiled by Bloomberg above Beyond’s forecast -- the stock’s 33% gain last week has raised the bar. The latest rally has extended the stock’s post-IPO surge to 840% through Friday’s close, the highest return among new issues in the U.S. this year.
“This quarter is important,” Bloomberg Intelligence food analyst Jennifer Bartashus said in a telephone interview. “If there’s anything that may cause investors to think they may not live up to their current guidance, or the expectations of a better guidance, that could pull the stock back down more.”
Besides full-year numbers, analysts will be looking for more commentary on the company’s production capacity and supply capabilities. As Beyond Meat expands its partnerships, will it have enough capacity to keep up with the increased demand? Also, does it have sufficient suppliers locked in? These questions may surface during today’s call, Bartashus said.
For now, investors are optimistic. To their credit, the stock soared 39% after Beyond’s inaugural earnings report as a public company last month, even as some analysts sounded alarm bells on valuation. Most now agree the stock can’t be chased at these levels -- none rate it a buy -- but JPMorgan Chase’s Ken Goldman has recommended it “for a trade.”
Strong survey results and “under-appreciated” growth in the food-service channel make “an EPS beat more likely,” Goldman wrote in a mid-July note. “We also anticipate a constructive tone from CEO Ethan Brown and team” on the call, he said.
Sanford C. Bernstein’s Alexia Howard sees potential guidance increases from the company’s latest partnerships: Tim Hortons recently launched Beyond Meat’s products across Canada and Blue Apron Holdings Inc. said it will add its plant-based burgers to menus. Still, Howard cautions that giants like Tyson Foods Inc. and Nestle SA are set to enter the plant-based meat market in the U.S. later this year.
Short interest hovers around 44% of free float, according to financial analytics firm S3 Partners.
Just the Numbers
- 2Q adj. loss/share 8c (range loss/share 11c-4c)
- 2Q rev. $52.7 million (range $45.2 million-$58 million)
- Full-year adj. loss/share 26c (range loss/share 30c-16c)
- Full-year rev. $223.7 million (range $210 million-$242 million)
- Beyond Meat expects full-year revenue to top $210 million
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