Shares of Beyond Meat (BYND) slumped in morning trading after Tyson Foods (TSN) said it will begin selling plant-based nuggets this summer.
TYSON UNVEILS PLANT-BASED PRODUCTS: Before the market open, Tyson Foods said it will debut plant-based nuggets and this summer as part of a new brand, Raised & Rooted, that will sell plant-based and blended meat products. Also launching this summer are blended burgers made with a combination of beef and plants, the company said. Further, Tyson said its existing Aidells brand has launched Aidells Whole Blends sausage and meatballs, which are made with chicken and plant-based ingredients. Tyson said it expects to introduce additional alternative protein products through multiple customers and sales channels.
"The initiative makes Tyson Foods the largest U.S. meat producer to enter the growing alternative protein segment with its own products," Tyson said this morning in a statement. Chief Executive Officer Noel White added, "We remain firmly committed to our growing traditional meat business and expect to be a market leader in alternative protein, which is experiencing double-digit growth and could someday be a billion-dollar business for our company."
WHAT'S NOTABLE: Tyson's move comes as Beyond Meat announced that it will release the latest version of the Beyond Burger, the brand's flagship product, at grocery stores nationwide. According to the company, the new, meatier Beyond Burger features marbling designed to melt and tenderize like traditional ground beef. Made using a blend of pea, mung bean and rice proteins, the blend provides a "meatier taste and texture that mimics the chew and juiciness of beef."
In April, Tyson quietly sold its stake in Beyond Meat ahead of the alternative protein company's IPO. At the time, Axios' Dan Primack said tensions had been rising between the two companies, especially after Tyson CEO Noel White said in February that the poultry giant would develop its own plant-based protein products. In a statement provided to Axios at the time, Tyson said that, "Tyson Ventures is pleased with the investment in Beyond Meat and has decided the time is right to exit its investment."
RECENT ANALYST COMMENTARY: On Wednesday, Beyond Meat received its second downgrade of the week, with Bernstein analyst Alexia Howard downgraded the stock to Market Perform. In a research note to investors, Howard said the downgrade is due to "valuation considerations as the stock has traded in a highly volatile manner since its IPO likely due to its limited public float," adding that she now sees limited upside for the stock. On Tuesday, JPMorgan analyst Ken Goldman cut the stock to Neutral, saying that with the stock at around $168, seeing more upside "requires assumptions" that the analyst is "not yet comfortable with."
On Thursday, Credit Suisse analyst Robert Moskow said the launch of plant-based chicken nuggets and patties and hybrid beef-plant burgers and sausages supports his positive view on Tyson Foods. Perdue and Hormel Foods (HRL) have also signaled similar intentions to pursue hybrid meats, Moskow noted. However, the analyst does not view Tyson's hybrid burgers as a major threat to Beyond Meat, as he feels Beyond's burger products are "more revolutionary and broader" in terms of potential consumer appeal. Although competing hybrid burgers offer less saturated fat than the 100% plant-based products from Beyond and Impossible, "they simply don't taste as good in our experience," he added.
PRICE ACTION: In morning trading, shares of Beyond Meat are down over 2.4% to $138.50. Shares of Tyson Foods, meanwhile, are up 1.7%.
Beyond Meat
-2.51 (-1.77%)
Tyson Foods
+1.68 (+2.05%)
Hormel Foods
+0.12 (+0.29%)