Analyst Note| Rebecca Scheuneman, CFA |
Beyond Meat reported second-quarter sales of $149 million, topping our $140 million estimate and the $142 million mark for FactSet consensus. But this strength was overshadowed by cautious third-quarter revenue guidance of $120-$140 million versus our $174 million estimate and $152 million for FactSet consensus. Management attributed its cautious stance to uncertain food-service demand given the recent uptick in COVID-19 cases and restaurant labor shortages, a shift of the July 4 holiday from the third quarter to the second, and the recent loss of 5,000 Dunkin Donuts doors. While the latter has a lasting impact, resulting in a 3% drop in our $144 fair value estimate, we do not think the development (or the firm’s cautious tone) implies waning consumer interest. We expect setbacks from time to time due to a misalignment with Beyond Meat’s products and a restaurant’s customer base, or poor execution. We maintain our stance that plant-based meats will play a significant role in feeding the world, given growing emerging market per capita consumption of meat juxtaposed with fixed agricultural resources. We think Beyond Meat, the market leader, will continue to be a major player in the market, although limited visibility on the durability of its brand in a quickly evolving marketplace keeps us at our no-moat rating.