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Bernstein Estimates Beyond Meat's 'Blue-Sky' Scenario With McDonald's

Jayson Derrick

Plant-based food maker Beyond Meat Inc (NASDAQ: BYND) continues to work with McDonald's Corp (NYSE: MCD) in testing a "PLT" sandwich in Canada. Under a "blue-sky" scenario, total revenue can increase from $280 million in 2019 to around $910 million in 2021, according to Bernstein.

The Analyst

Alexia Howard maintains an Outperform rating on Beyond Meat with a $106 price target.

The Thesis

Bernstein's first-hand checks and conversations at McDonald's Canada locations serving the "PLT" sandwich points to a "largely positive" response but not a "blowout success," Howard wrote in a note. Specifically, some stores are selling around 150 "PLT" sandwiches a week is a "reasonable" amount but not compelling enough to warrant a nationwide launch in Canada and the U.S.

Howard said it's unlikely Beyond Meat has enough capacity to support a nationwide launch at this time, but could progress to over $800 million in internal capacity within the next one year to 18 months. At that point, a Beyond "PLT" nationwide launch could be possible and would add over 60% to Beyond Meat's current sales.

If a broader partnership comes to fruition, Howard says the stock could hit $130 per share.

Beyond Meat's growth prospects extend beyond McDonald's and a similar partnership to supply Dunkin Brands Group Inc (NASDAQ: DNKN) represents another "sizable" opportunity, the analyst wrote in the note.

Beyond Meat is also well-positioned to gain market share if the African Swine Fever outbreak in China contributes to a global protein price increase in 2020. However, the short interest in Beyond Meat's stock stands at a "relatively high level" of 21% which implies the stock is still "controversial."

Price Action

Beyond Meat's stock traded around $84.63 per share at time of publication.

Related Links:

Beyond Meat Beefs Up McDonald's Canada Partnership

Analyst: Plant-Based Food Opportunity Extends Beyond Food Makers

Latest Ratings for BYND

Date Firm Action From To
Jan 2020 Maintains Outperform
Dec 2019 Initiates Coverage On Perform
Nov 2019 Initiates Coverage On Buy

View More Analyst Ratings for BYND
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