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StockBeat: Beyond Meat's Sizzling Rally Ends as Wall Street Flags Concerns

By Yasin Ebrahim

Investing.com – Beyond Meat (NASDAQ:BYND) has enjoyed a red-hot rally of late, but its shares were dealt a blow Tuesday after analysts said most of the good news has been baked in.

Bernstein downgraded Beyond Meat (NASDAQ:BYND) to market perform from outperform on valuation worries. Shares fell 6%.

"In particular, we believe that Beyond Meat’s near-term sales growth potential in the U.S. is largely priced in at this point," said Bernstein analyst Alexia Howard.

The day of red does little to mask the plant-based meat company's explosive run, with shares up about about 55% for the year as investors bet that a tie-up with MacDonald's could be on the menu.

McDonald's last week said it would expand its trial of Beyond Meat's plant-based burgers in southwestern Ontario in Canada, starting Jan. 14. The 12-week trial will run at a total of 52 locations.

A McDonald's-Beyond Meat deal is forecast to add between $20 to $23 to Beyond Meat's share price – but with its shares up around $30 for the year, there is little room to advance, Oppenheimer argues.

"Applying a 7–8x sales multiple to our ~$200M BYND/MCD base case sales, a full US rollout of the P.L.T. could add $20–23/share per our math," said analyst Rupesh Parikh.

"Based on the recent appreciation, we believe BYND shares have now incorporated benefits related to any potential U.S. expansion with MCD," he added.

Beyond the U.S., however, there will likely be plenty of appetite for the company’s meatless products that promise significant growth.

"We believe that BYND has significant growth potential in Europe, which could more than double its total addressable market," Howard observed.

Seth Goldman, executive chairman of Beyond Meat, alluded to plans to expand abroad, saying "we are expected to do something this year."

"The real goal would be to take a crop from every continent where we produce and grow the crops and produce the product in that continent," he added.

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