Bank Of America On Beyond Meat: 'No Cattle' To The Investment Story

Beyond Meat Inc (NASDAQ: BYND) deserves credit for developing a meat alternative product that could perform well within the growing addressable market. The stock's 200 percent gains since its May 2 IPO implies there's "no cattle" to the investment story at current levels, according to Bank of America.

The Analyst

Bank of America's Bryan Spillane initiated coverage of Beyond Meat with a Neutral rating and $85 price target.

The Thesis

Plant-based products succeeded in gaining a 13 percent market share in the milk category and a similar disruption could occur within the beef category, Spillane wrote in a note. Assuming this plays out, Beyond Meat faces a potential $40 billion market within 10 years.

Spillane said first-hand checks into search trends, social media posts, scanner data and restaurant orders all suggest "strong interest" for plant-based meat. Beyond Meat has a unique advantage as it has already succeeded in building brand awareness, gained a portfolio of celebrity ambassadors and organic influencers to drive awareness.

Despite multiple positive developments, Beyond Meat faces several investment risks moving forward. These include:

• Difficulty in addressing soaring demand from a service and quality perspective;
• Prices are high versus traditional meat products;
• Competition could "flood" the market; and
• Commercialization of competing technologies like lab-grown meats.

Price Action

Shares of Beyond Meat were trading higher by more than 4.4 percent at $89.74 Wednesday morning.

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Photo courtesy of Beyond Meat.