Shares of Beyond Meat (BYND) are on the rise after Bernstein analyst Alexia Howard started coverage of the stock with a Buy-equivalent rating. The analyst sees even more upside ahead, despite the shares' outperformance since the company's recent initial public offering.
BUY BEYOND MEAT: With the stock up more than 200% since its trading debut last week, Bernstein's Howard still sees even more upside for Beyond Meat, albeit much smaller than its recent gains. The analyst started coverage of the stock with an Outperform rating and a $81 price target, noting that recent and planned expansion in production capacity look set to facilitate "rapid sales growth" in 2019 and beyond. Howard estimates that if the alternative meat category follows the same growth path as plant-based beverages, the total addressable market could reach about $40.5B in the U.S. over the next decade. While the company is facing competition from the likes of Impossible Foods, rising consumer demand should allow multiple brands to share the market, the analyst contended. Additionally, Howard argued that the African swine fever outbreak in China could drive up global meat prices, making plant-based burgers look more attractive.
On Thursday, Beyond Meat opened at $46 per share in its initial public offering after being priced at $25 per share. Other Wall Street analysts will be able to issue their opinions on the stock after research restrictions expire on May 28. Goldman Sachs, JPMorgan, Credit Suisse, Bank of America Merrill Lynch, Jefferies and William Blair are among banks that managed the company's initial public offering.
WHAT'S NOTABLE: During its earnings conference call on Monday, Tyson Foods (TSN) said it expected some costs in its prepared food business to rise in the second half of this year, as beef and pork move higher on worries over the swine fever outbreak. Additionally, the company said it will launch its own meatless products starting this summer on a limited basis and a "much larger scale" in the fall. Tyson sold its stake in Beyond Meat, which produces plant-based meat substitutes, before the company went public.
PRICE ACTION: In afternoon trading, shares of Beyond Meat have jumped almost 13% to $84.50.
Keywords: Beyond Meat; meat alternative; plant-based; IPO; initial public offering