Beyond Meat has been all the rage since it hit the market, with shares climbing to over 6x the IPO price of $25, but competition is heating up as market heavyweights bet big on the new faux meat trend.
Pinpointing just how much Beyond Meat is worth is one of the hottest subjects on Wall Street following an almost 700% surge in its stock since its initial public offering on May 2. The company has attracted investors wagering it will end up being the dominant player in the emerging market for faux meat hamburgers, sausages, and other meat options, even though the company has yet to turn a profit.
Beyond Meat is the best-performing US IPO of 2019 up until now. Nevertheless, the stock has experienced several rounds of volatility in recent weeks. Moreover, however, this new healthy alternative has captured the attention of some of the food industry’s greatest players.
Faux meat is Wall Street’s new favorite trend
Major companies such as Tyson Foods and Nestle have revealed comparable faux meat plant-based products, while competitor Impossible Foods has had success working with Burger King to launch the Impossible Whopper across the US.
Tyson Foods released its Tyson Foods 2019 Summer Trends Report on Wednesday, and in it, the business outlined eight new food patterns expected to shake up the industry. On the top of the list? You guessed it … alternative meat.
“The numbers reflect the interest: the alternative protein segment is growing double digits. This is clearly a trend that is not going away,” the report stated.
Tyson– a one-time financier in Beyond Meat– is betting that it can attract more customers who are worried about their health and animal well-being. The food producer’s move into the faux meat space will likewise test the argument from some Beyond Meat analysts that plant-based products designed to look like and taste like real meat will be hard for rivals to replicate.
Beyond Meat’s biggest rival, UK-based The Meatless Farm revealed on Monday that it had secured an agreement to sell its hamburgers at Whole Foods shops in the United States. market.
Analysts raise concerns over Beyond’s valuation
At nearly $9 billion, Beyond Meat’s market cap is near several fully grown food companies. Poultry producer Pilgrim’s Pride, for instance, checks in at $6 billion, and Campbell Soup Co, which is essentially a household name, boasts a market cap of $12 billion.
Many Wall Street players do not see the company’s high valuation as warranted. The eight experts covering the stock have price targets ranging from 11% to as much as 46% below the present share cost of around $158, following its recent rally.
As it stands right now, Beyond’s price is too high for anyone to consider it a purchasing chance. No Wall Street expert who covers the stock has a ranking above neutral, and one bear states that now is the time to offer.