As Americans become more comfortable dining out in the age of the COVID-19 vaccine, Bernstein analysts are bullish about Beyond Meat.
Bernstein upgraded the alternative meat maker, known for its plant-based burgers and ground beef look-a-like, to a revised price target of $130 in a note published Monday. In it, analyst Alexia Bernstein said she believes restaurants are on the rebound post-pandemic with more consumers dining out again after a major decline last year amid the pandemic.
Indeed, with more restaurants open at full capacity following COVID-19 shutdowns, Beyond Meat is expected to get a boost from consumers returning to restaurants again and potentially seeking out alternative protein options on menu items.
"The drop off in foodservice sales had a very direct impact on the business domestically and internationally, and this, in turn, led to a marked acceleration in Impossible Foods’ efforts to expand in retail channels," wrote Bernstein analysts in the note led by Howard, noting Beyond Meat's growth slowed to 37% last year.
Still, analysts note that while meat alternatives were hit hard as more consumers opted to eat at home, it hasn't hindered demand for plant-based meats.
"We expect foodservice channels to rebound as consumer mobility improves post the pandemic and this should also lead to decreased competition in the U.S. retail channel," the note continued.
Beyond Meat went public in 2019 and has expanded to 28,000 retail locations and more than 80 countries, the company said. It has continued to expand partnerships with fast-food chains, including Dunkin’, Yum! Brands-owned KFC, Taco Bell and Pizza Hut, among others as it competes with alternative meat competitors like Impossible Foods.
Analysts noted that the company's opening of the Netherlands plant will improve Beyond's cost position in Europe and allow it to reduce pricing there, and Beyond's global partnership with McDonald's, they explained, will also buoy sales significantly throughout 2022.
The company launched a leaner version of its beyond Burger burger made with 35% less fat and saturated fat and fewer calories than 80/20 beef with no cholesterol in May. And with consumers increasingly focused on seeking out food items that promote health and wellness, Howard believes Beyond’s new menu item will likely propel the brand forward.
"This renewed focus on health messaging may be an important driver of recruitment going forward. Overall, we believe that Beyond Meat should be recognized as a reopening play that stands to regain meaningful momentum over the coming quarters," the note said.