Beyond Meat Inc. says robust in-store sampling of its plant-based meat products is coming, and with it, an expected business rebound.
Chief Executive Ethan Brown reminded analysts on the company’s earnings call that it was about to launch its biggest in-store sampling program to-date in 2021, only to have those plans scuttled as the delta variant of the coronavirus took hold, according to a FactSet transcript.
“Today, after two years with only relatively scarce in-store sampling, in the first half of this year, we expect to resume robust in-store sampling programs for retail items. These effective programs have long been a staple of our field marketing efforts, given our conviction that tasting is believing.”
But Brown took an upbeat tone on the call, looking ahead to shifts in the business and consumers that should benefit future results. Top among them will be a return to healthy dining, which Brown says took a hiatus during COVID-19 as consumers turned to comfort food.
“[G]rowth in the plant-based meat category decelerated meaningfully in U.S. retail from 45% in 2020 to negative 0.4% in 2021,” Brown said.
The shift was due, in part, to “consumer migration to fast food, particularly those with drive-through, where we were largely absent, and consumer trends around food choice, as well as a reduction in our ability to sample.”
In addition, the company will launch new products through its joint venture with PepsiCo Inc.
called PLANeT Partnership in the coming weeks. A fall launch of Beyond Chicken Tenders is also expected.
But the company has also faced a number of expenses tied to labor and the supply chain, some of which Brown said would soon come to an end.
“Q4 EPS marked another bumpy print for Beyond Meat and underscored the many moving parts to the story,” wrote Mizuho’s John Baumgartner in a note.
“We believe with every disappointment, Street expectations become closer to bottoming and at this point, we believe numbers may be bottoming. In turn, we see two potential events that may drive an investor sentiment inflection; a return to retail growth for the U.S. plant-based meat category (but comps don’t become consistently easy until summer 2022) and a substantial launch for Beyond Meat at
McDonald’s as a permanent menu item in the U.S. (unlikely prior to H2).”
Mizuho rates Beyond Meat stock at neutral and lowered its stock price target to $45 from $59.
JPMorgan analysts were “a bit unnerved” by the margin decline Beyond Meat experienced, which the company attributed to investment in growth, inflation and other non-recurring headwinds.
“These are all likely valid, and Beyond Meat is hardly the only growth company we cover with fast-eroding margins. But the issue here is far more extreme than what we’re seeing anywhere else, and to us it bespeaks the extraordinary effort the company is putting in just to maintain sales at the current level.”
JPMorgan rates Beyond Meat stock at underweight and slashed its price target to $32 from $54.
Beyond Meat stock has plunged 69.4% over the past year while the S&P 500 index
has gained 15%.