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A Piper Sandler analyst cut the price target on Beyond Meat (NASDAQ:BYND) to $9 from $12 and reaffirmed the Underweight rating.
The analyst estimates that Beyond Meat’s Jerky, which was launched earlier this year in collaboration with PepsiCo (NASDAQ:PEP), will facilitate headwinds for the company. He sees 7-8 months of inventory, which is well above the typical 30 days.
“Retail sales peaked in May and are now ~$2.6M per month, suggesting there is already 7-8 months of inventory in the system, assuming its sales pace doesn’t slow further (as is typical for new products after initial trial lift). We consider ~30 days to be typical (and needed to drive refill orders). Kroger (NYSE:KR), for example, had 18-25 days of inventory in its last four quarters,” he said in a client note.
The analyst notes a -47% promotional coupon on Instacart and -18% discounts on Amazon, which he describes as “elevated discounting.”
“Beyond may already be using larger price cuts on some items to sell through inventory, which could be a drag on net sales. Its elevated trade inventories also likely weigh on 2H22 sales, as it effectively pulled forward shipments from future quarters. If product sells slowly enough, returns are also possible. Jerky has a 13-month shelf life,” the analyst added.
Moreover, the analyst is “increasingly concerned” that no national launch of McPlant is coming. The test ended in late April with no news reported since.
As a result, the analyst cut 2H22 and 1H23 estimates. BYND shares are down about 60% YTD.
