Barclays Says 'The Worst Is Yet To Come' For Beyond Meat And Tyson Foods As Inflation Takes A Bite Out Of Profits

Zinger Key Points
  • Barclays downgraded Beyond Meat and Tyson Foods to Underweight and cut price targets.
  • "Consumers globally are tightening their wallets, and we are seeing U.S. consumers trading down to cheaper beef and chicken cuts."

Barclays analysts expect protein sales to be impacted by rising prices for years to come, hence the downgrade of Beyond Meat Inc BYND and Tyson Foods, Inc. TSN Monday morning.

What Happened: Analysts at Barclays slapped Underweight ratings on Beyond Meat and Tyson Foods and slashed price targets to $10 and $58, respectively.

The firm is becoming increasingly cautious in the sector, claiming "the worst is yet to come" for protein companies, according to several reports. 

Beef and chicken prices are expected to continue to trend higher for longer than originally anticipated, which is likely to impact profitability. Although many expect inflation to ease in 2023, Barclays' expects meat economics to continue to deteriorate through 2025.

"Consumers globally are tightening their wallets, and we are seeing U.S. consumers trading down to cheaper beef and chicken cuts, with some South American buyers switching out of these proteins entirely into eggs and beans, for example. Alternative meats may be less appealing for the same reason, given affordability issues," Barclays wrote in a new note to clients.

See Also: Here's How Much You Would Have Made Owning Tyson Foods Stock In The Last 15 Years

Beyond Meat doesn't have the same economies of scale as big manufacturers that have been producing products for years. Furthermore, niche products often come with higher costs and higher prices. Tyson Foods has made a push into plant-based meat alternatives in recent years, the analysts noted.

Current market conditions are likely to continue to act as a headwind for the pair of protein companies in the years ahead, Barclays said.

BYND, TSN Price Action: At publication time Monday, Beyond Meat was down 3.14% at $12.32 and Tyson Foods was down 3.06% at $65.27, according to Benzinga Pro.

Photo: Courtesy of Beyond Meat.

Market News and Data brought to you by Benzinga APIs
Price Target
Posted In: Analyst ColorShort IdeasPrice TargetSmall CapAnalyst RatingsTrading IdeasBarclaysfood
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!