What is it going to take for Beyond Meat (BYND) stock to rebound? The plant-based “meat” giant has certainly lost some sizzle. Ahead if its third quarter fiscal 2022 earnings results Wednesday, investors want to know whether the shares have bottomed. Aside from wage inflation, the company is dealing with supply chain shortages which has impacted its once-torrid growth pace. It also appears that commercial traction is fading, which has resulted in steepening losses.
As a result, the stock has lost close to 80% of its value so far this year, including a 63% decline in the past six months. In the most recent quarter, the company not only missed revenue estimates, but it also announced a large quarterly loss. Analyst Ken Goldman at JPMorgan who recently withdrew his price target on the stock, isn’t yet confident that Beyond Meat shares are ready to recover.
“Though we appreciate the opportunity for BYND to improve margins via newly-announced efficiencies, we may struggle to locate a bottom in the shares until we see evidence that demand is growing for the company’s products,” Goldman said. Having recently launched its Beyond Steak, which is available at Kroger and Walmart stores nationwide, the company is betting that its innovation can help drive higher revenues in the quarters ahead.
While management has guided for continued revenue growth, the market also wants to know when the company can start growing its gross margins and begin achieving profitability. In the meantime, the stock’s valuation is more appealing at current levels, and assuming that the company doesn’t lower its revenue and profit guidance, the stock could stabilize and start moving higher from here and might even sizzle again.
For the three months that ended September, Wall Street expects the El Segundo, Calif.-based company to lose $1.14 per share on revenue of $98.11 million. This compares to the year-ago quarter when the loss came to 87 cents per share on revenue of $106.43 million. For the full year, ending in December, the loss is expected to be $5.20 per share, wider from a year-ago loss of $2.87, while full-year revenue is expected to decline 2.4% year over year to $453.35 million.
Beyond Meat’s recent struggles are also felt by some of the largest retailers, including Walmart (WMT) which has struggled with its own food price inflation that continues to impact its shoppers, forcing Walmart and other Beyond Meat partners to mark down products, which are likely to impact Beyond Meat’s revenue and profits for the just-ended quarter.
In the second quarter, the company reported adjusted loss of $1.53 per share which missed Street estimates by 39 cents. The Q2 revenue also fell short of estimates, coming in at $147.04 million, or $2.04 million shy of consensus. The profit miss was the company’s eight in a row, while revenue was shy for the third straight quarter. Despite all of that, there is still hope that the company can turn things around. All told, this will be an important quarterly report for the company which has now seen how consumers have responded to its product while gaining insight into their spending habits.
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