Beyond Meat Stock Gets a Big Target-Price Bump, but Goldman Sachs Still Says Sell -- Barrons.com
11:19 am ET August 10, 2020 (Dow Jones) Print
By Al Root
Beyond Meat stock was trading down, curiously, after Goldman Sachs increased its price target for shares -- by a lot -- Monday morning.
Analyst Adam Samuelson raised his price target for the alternative-protein pioneer from $44 to $112. That is a 155% increase. Despite the rise, he kept his Sell rating on shares, which appeared to be weighing on the stock.
Shares were down 4.7% to $125.32. The S&P 500, for comparison was down 0.2%. Still, year to date, Beyond Meat stock is up 69%, far better than comparable gains of the S&P.
Samuelson's research report follows Beyond Meat's second-quarter earnings which easily exceeded Wall Street expectations. He raised his 2021 and 2022 sales estimates to $650 million and $943 million, respectively, from earlier estimates of $612 million and $884 million.
"Retail benefiting from pantry-stocking," Samuelson wrote, acknowledging that Beyond Meat is managing through the pandemic better than expected. Still, the 6% to 7% rise in his sales estimates don't warrant a ratings change. Samuelson now values the company at nine times forward sales estimates. Beyond Meat stock, however, is trading for about 11 times estimated forward sales estimates.
"Food service lags behind industry benchmarks," Samuelson wrote. That was a negative he saw from the recent earnings report. Beyond Meat has relatively more exposure to smaller, independent restaurant chains. Those have been hit harder than major players such as McDonald's (MCD) and Chipotle Mexican Grill (CMG)
Samuelson isn't alone in struggling with valuation. Wall Street, overall, has had trouble with the stock. Only three analysts covering the company, out of 22, rate shares Buy. The average Buy-rating ratio for stocks in the Dow Jones Industrial Average is about 55%. What's more, nine analysts rate shares Sell. The average Sell-rating ratio for stocks in the Dow is 7%.
The average analyst price target is about $113, close to Samuelson's target price and about 11% lower than recent trading levels.
Monday's drop marked the fourth day of declines following Beyond Meat's strong earnings. The company has beaten estimates every quarter reported as a publicly traded company, and the stock has traded down following the reports in four of the six quarters.
Wall Street, in the short run, is always an expectations game.
Write to Al Root at allen.root@dowjones.com
(END) Dow Jones Newswires
August 10, 2020 11:19 ET (15:19 GMT)
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