UBS upgraded Beyond Meat stock despite a failure in the third quarter
McDonald & # 39; s Corp. and Beyond Meat Inc. haven't confirmed they're working on McDonald's new plant-based "McPlant" sandwich, and BTIG analysts are wondering why.
"While we firmly believe that Beyond Meat will ultimately be McDonald's supplier for its McPlant platform, we don't expect McDonald's to launch a plant-based burger in the US in 2021," analysts under the lead write by Peter Saleh.
"Additionally, we find it extremely strange that no management team is willing to confirm a relationship or an intention to work together."
announced Monday during its investor event that the McPlant plant-based sandwich will be tested next year.
Likewise: McDonald & # 39; s will launch its own plant-based burger, the McPlant, after the Beyond Meat test
Last year McDonald & # 39; s and Beyond Meat
conducted a test of plant-based burgers which ended without further discussion of the next steps.
Beyond Meat said in a statement that it "helped create" the McPlant. According to McDonald & # 39; s, the suppliers have not yet been announced.
"Our relationship with McDonald & # 39; s is good. It's really strong. Our work there on behalf of what they do continues," said Ethan Brown, chief executive of Beyond Meat, during the company's earnings statement from a FactSet protocol.
“And I really want to let our big strategic customers know what they want to share about their supplier base and what they want to share about their launch plans. I don't want to go any further and insert myself so far that we dominate the headlines on Investor Day. "
Likewise: McDonalds is bringing back the McRib nationwide
Even so, Brown said, while unsure of how McDonald's will proceed with marketing the McPlant, "we clearly believe that it would be in everyone's best interests to use our brand and I would oppose efforts to not to use them. ”
According to BTIG, McDonald & # 39; s has seen no changes in its relationship with Beyond Meat, but it does believe that McDonald & # 39; s planned new McRib and Chicken Sandwich will postpone a McPlant launch.
BTIG is pricing the purchase of Beyond Meat stock with a price target of $ 149 versus $ 173.
"(W) We assume that the pandemic-induced headwind in the food service and, to a lesser extent, in the retail sector will continue for a few more quarters," said BTIG. "We continue to believe in the long-term development of the plant-based meat category, but expect short-term challenges to weigh on results."
Beyond Meat Inc. shares fell 18.1% Tuesday after earnings fell below expectations. However, UBS upgraded the stock from selling to neutral, saying the long-term outlook is still "intact."
UBS lowered its price target from $ 110 to $ 107.
See: Beyond Meat stocks are down more than 25% as COVID-19 weighs on earnings
"Short-term headwinds are now being priced into the stock," wrote analysts headed by Erika Jackson.
One of these headwinds is the rapidly growing competitive field in the plant-based food category. Beyond Meat has also been influenced by the well-stocked freezers of consumers.
"With consumers unloading their pantries in the quarter, retail growth was not enough to fully offset the declines in food service like in the second quarter," the analysts said.
Though the food service business struggled, UBS notes that Beyond Meat added 10,000 points of sale in the third quarter and worked with McDonald & # 39; s Corp. McPlant is working on, which analysts say could bring sales of $ 150 million for Beyond Meat.
"We expect Beyond to grow beyond end market demand and hold a leading market share," said UBS.
Analysts at Canaccord Genuity expect the headwinds in food service to persist through 2021.
"COVID-19 has … pushed the market introduction of retail stores in large fast-food chains due to the ongoing uncertainty," write analysts.
Canaccord is pricing Beyond Meat stock with a target price of $ 125 versus $ 140.
Beyond Meat stocks are up 63.1% year-to-date, while the S&P 500 index
rose by 9.6% in the reporting period.