Shares of Beyond Meat are up slightly after being initiated by Barclays with a buy rating.
On Thursday, Barclays initiated coverage of Beyond Meat and gave the company a buy rating.
The rating is somewhat surprising, considering the stock is up more than 500% from its IPO price. Many analysts are hesitant about the stock due to its high valuation.
Barclays analyst Benjamin Theurer also gave the stock a price target of $185, which represents an upside of roughly 20%. Of the nine analysts covering Beyond Meat, most recommend holding the stock. Goldman Sachs is the only other firm that gave the company a buy rating.
3 Things to Like About Beyond Meat
When it comes to Beyond Meat, Theurer is more bullish than most analysts. Here’s a quick overview of his reasoning behind the strong rating.
The Opportunities for the Meatless Industry Are Huge
Theurer estimates that currently, Beyond Meat could capture 4.5% of the meatless market share. That figure would then translate to 10% of the global market share within the next decade.
The meatless industry is already a $14 billion industry in the U.S. According to Barclays, it could become a $140 billion industry in the next ten years. Growing concerns over climate change and animal welfare help to make this a genuine possibility.
Beyond Meat Continues to Expand Its Product Lineup
The Beyond Burger is the company’s staple product, but it isn’t stopping there. In June, the company introduced its newest product, Beyond Beef. This ground beef substitute consists of peas, rice proteins, and mung bean. It’s designed to mimic the texture of traditional beef.
The most significant factors that affect Beyond Meat’s product lineup are consumer taste and price. But the company is committed to coming up with new and innovative products that offer healthier alternatives to meat.
The Company Is in a League of Its Own
And finally, Theurer summed it up by writing that Beyond Meat is “not your typical meat company.” Most of its competitors are private, and Beyond Meat is entering the market at a much more aggressive pace. This means its growth and revenue are much higher than other plant-based companies.
Challenges Do Lie Ahead for Beyond Meat
Beyond Meat’s shares took off like a rocket after its IPO, rising to a 52-week high of $239.71. The stock has since dropped to $155 per share and its shares have been up and down since early August. Most recently, the stock fell 7% after the restaurant Tim Horton’s announced it was scaling back on Beyond Meat products.
Theurer did acknowledge that Beyond Meat has challenges it will need to down the road. In particular, Tyson could be a formidable competitor in the meatless industry in the coming months.
And the company still has to address a few issues like its supply chain and its capacity constraints. But the company’s big growth opportunities could make it an excellent investment option.
Jamie Johnson is a Kansas City-based freelance writer who writes about finance and business. She covers a variety of personal finance topics including trading, investing, loans, and credit. Jamie’s work has been featured on InvestorPlace, GOBankingRates, Yahoo Finance, and Business Insider.