Rapid growth has pushed this alternative meat stock higher this year, and one technician says the stock’s chart points to double-digit upside on the horizon.
Beyond Meat (NASDAQ: BYND) shares got a boost this week as Piper Sandler analyst Michael Lavery boosted his price target on the stock from $130 to $178 citing research that showed Gen Z likes plant-based protein more than the rest of us old fogies.
Lavery and his team surveyed 10,000 teens with an average age of 15.8 and found that 18% of them are consuming plant-based meat like the kind made by Beyond Meat.
Among the 82% of teens who hadn’t yet tried alternative meat, 35% said they were open to trying it. Comparatively, only 20% of adults surveyed back in February who hadn’t yet tried plant-based meat said they were open to trying it.
“We expect plant-based meat’s rapid growth to continue, as teen are more willing to try it than older consumers,” Lavery wrote in a note. “Beyond is one of the early leaders in this growing category, but growing competitive pressure remains a risk.”
MKM Partners chef market technician JC O’Hara said this week that he’s getting more bullish on Beyond Meat shares.
“This is one of the better-looking charts out there,” O’Hara said. “What I really like about this setup is the fact that price is currently breaking higher from a multi-month base pattern as we speak, and as it does it’s establishing a new uptrend.”
Looking at BYND’s chart, O’Hara says the stock hit overhead resistance around $165 to $170, which it broke out of at the beginning of the month.
“This question becomes where can Beyond go?” O’Hara said. “We have two clear upside price targets – that first level is $200, a nice round number… and the second overhead level that we’re looking at is $240. So, overall, a great chart with plenty of upside left in our opinion.”
The $240 level, which would be an all-time high for the stock, is 24% higher than Beyond’s closing price on Thursday of $193.38.
Chantico Global’s Gina Sanchez argues that Beyond’s fundamentals need to catch up to the stocks parabolic climb higher.
“Its revenue growth is meteoric but it is still digging itself out of a negative cash flow hold and negative margins,” Sanchez said. “Now that’s not to say that they’re not going to get there. That meteoric growth is going to help them get there, but they’re trading very rich. I mean, you’re talking 300+ times forward PE, 6,000 times trailing PE.”
Wall Street is also concerned about Beyond Meat’s valuation. The stock trades for around 14 times estimated 2021 sales while other packaged foods companies trade at around 2 times.
Still, the company is growing rapidly and investors appear to favor such growth, pushing the stock nearly 156% higher so far this year.