Beyond Meat Bounces Back from Sharp Decline with New Meatier Burger Patty

The Impossible Burger 2.0 being introduced at a press event during the CES 2019 in Las Vegas Nevada on Jan 7 2019

Not wanting to be left behind, Tim Hortons has begun testing three new Beyond Meat lunch sandwiches and could distribute them across Canada by the end of the summer. Starting with an assessment of the meatless meat market's growth over time, I value Beyond Meat with a series of optimistic assumptions, i.e., that it gains a significant market share and build competitive advantages, but my assessment of value is well below the market price. It's also facing increasing competition from other "new meat" companies like Impossible Foods. Impossible Burger is arguably the best known of the bunch thanks, in part, to its "bleeding" plant-based burgers.

But JPMorgan's Goldman, who just raised his forecast for the stock to $120 a share last Friday, noted in his report Tuesday that Beyond Meat had surged "beyond our price target". Consulting firm Euromonitor predicts worldwide sales of meat substitutes will increase 22 per cent by 2023 to a total of US$22.9 billion. The two-day frenzy that lifted the stock 69% from Thursday's close through yesterday's close was too much, said the analyst. But one Wall Street analyst thinks the plant-based protein company's valuation is now beyond reason.

Nestle, the world's biggest packaged foods group, is aiming to sell a pea-based veggie patty called Awesome Burger under its USA plant-based Sweet Earth brand in the fall.

Beyond Meat's supply chain is ready for fast-food volumes, executives said on the company's first ever earnings call after the plant-based burgermaker went public last month.

United States company Kellogg has been present in alternative meat since the 1970s through MorningStar Farms.

Others active in the burgeoning business include Brazilian giant JBS, which is launching a vegetarian burger in its home market, and Tyson Foods, a one-time investor in Beyond Meat that plans its own plant-based product.

"There are risk factors to consider, such as alternative meat products being less healthy than claimed as a result of additives to appeal to customer taste", said the Barclays note.

Barclays also pointed to "potential regulatory restrictions" as far as marketing.

And the impact of mistakes could be amplified by the growing presence of bigger and more diversified companies that are racing into the market.

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