Beyond Meat Products 'Catching On With Consumers,' JPMorgan Says In Upgrade

Shares of plant-based food maker Beyond Meat Inc BYND have lost around 40% of their value since peaking at $239.71, and investors should buy the dip, according to JPMorgan.

The Analyst

Ken Goldman upgraded Beyond Meat from Neutral to Overweight with a price target lifted from $188 to $189.

The Thesis

The case for buying Beyond Meat at current levels is threefold, Goldman said in a Tuesday note. (See his track record here.)

First, the company is likely to sign new foodservice customers, including one or two large quick service restaurants by the end of 2019, the analyst said. This potential catalyst is not included in current guidance, which suggests "legitimate" potential for the company to continue posting revenue beats in upcoming earnings reports, he said. 

Second, third-party data remains favorable, including an 186% year-over-year increase in dollar takeaway in measured channels over the past 13 weeks, Goldman said. This happens to be the highest seen in nearly three years and implies the company's growth is being fueled by a compelling product that is "catching on with consumers," he said. 

Third, the stock's P/E multiple is certainly not sustainable north of 500 times, but a discounted cash flow model through 2030 based on "reasonable assumptions" points to a fair value of $189 per share, the analyst said. 

Some of the assumptions in the model include: 2030 revenue of $3.644 billion, 42% gross margins and operating profit of $847 million.

Price Action

Beyond Meat were trading higher by 7.85% at $155.85 at the time of publication Tuesday. 

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Photo courtesy of Beyond Meat.