Beyond Meat Sentiment Rises Amid Fear of Beef and Pork Shortage

(Bloomberg) --

The growing threat of a meat shortage is helping to lift shares of plant-based protein manufacturer Beyond Meat Inc.

The stock jumped 41% last week, its biggest weekly gain since going public last May. The advance followed news of food plant closures that could reduce the amount of pork and beef products available for U.S. shoppers in the near future.

“The market’s taking that as if there’s a shortage out there; Beyond Meat can potentially benefit,” said Rupesh Parikh, a senior analyst at Oppenheimer & Co. who tracks food, grocery and consumer products.

A surge in demand could provide some needed relief for Beyond Meat, whose revenue depends heavily on food service and restaurant businesses pummeled by social-distancing measures and stay-at-home orders. Even with last week’s gain, the stock is far from its highs of last year and only three of the 19 analysts surveyed by Bloomberg recommend buying shares.

Donald McLee, an analyst at Berenberg Capital Markets LLC, said the company has found a “perfect storm” with the specter of a meat shortage combined with Beyond Meat’s announcement last week of a deal with Starbucks Corp. to introduce its products in China.

“On top of them expanding internationally ahead of expectations, there’s also this window for them to capitalize on a shortfall of traditional meat,” he said. “That’s why I think you’ve been seeing the stock trade up a lot more.”

Parikh sees Beyond Meat’s exposure to the beleaguered restaurant sector as a potential threat to its performance going forward. Oppenheimer slashed its sales estimates for the company earlier this month.

In a March filing, Beyond Meat said it generated $153 million in 2019 revenue from its restaurant and food service channels, or about 51% of total net sales.

Both Parikh and McLee noted short-sellers have a particular interest in the stock, and a short squeeze could have inflated last week’s move. Beyond Meat’s short interest is 28% of float, down from a high of 46% in January, according to financial analytics firm S3 Partners.

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