Bernstein Estimates Beyond Meat's 'Blue-Sky' Scenario With McDonald's

Plant-based food maker Beyond Meat Inc (NASDAQ: BYND) continues to work with McDonald's Corp (NYSE: MCD) in testing a "PLT" sandwich in Canada. Under a "blue-sky" scenario, total revenue can increase from $280 million in 2019 to around $910 million in 2021, according to Bernstein.

The Analyst

Alexia Howard maintains an Outperform rating on Beyond Meat with a $106 price target.

The Thesis

Bernstein's first-hand checks and conversations at McDonald's Canada locations serving the "PLT" sandwich points to a "largely positive" response but not a "blowout success," Howard wrote in a note. Specifically, some stores are selling around 150 "PLT" sandwiches a week is a "reasonable" amount but not compelling enough to warrant a nationwide launch in Canada and the U.S.

Howard said it's unlikely Beyond Meat has enough capacity to support a nationwide launch at this time, but could progress to over $800 million in internal capacity within the next one year to 18 months. At that point, a Beyond "PLT" nationwide launch could be possible and would add over 60% to Beyond Meat's current sales.

If a broader partnership comes to fruition, Howard says the stock could hit $130 per share.

Beyond Meat's growth prospects extend beyond McDonald's and a similar partnership to supply Dunkin Brands Group Inc (NASDAQ: DNKN) represents another "sizable" opportunity, the analyst wrote in the note.

Beyond Meat is also well-positioned to gain market share if the African Swine Fever outbreak in China contributes to a global protein price increase in 2020. However, the short interest in Beyond Meat's stock stands at a "relatively high level" of 21% which implies the stock is still "controversial."

Price Action

Beyond Meat's stock traded around $84.63 per share at time of publication.

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