Analyst Note| Rebecca Scheuneman, CFA |
We think shares of no-moat Beyond Meat look compelling after falling 48% in 2021, versus the 5% increase in the Morningstar Packaged Food index. Investors grew concerned about decelerating growth of the plant-based meat category in U.S. retail outlets, which increased 8% in 2021 per Euromonitor, down from 45% in 2020. In our view, this deceleration does not reflect waning interest but difficult comparisons caused by the pandemic-driven surge in grocery sales in 2020. Sales of meat alternatives in U.S. retail outlets were $1.8 billion in 2021 per Euromonitor, a 57% increase over 2019, pointing to strong demand. We think this misconception presents a buying opportunity, with Beyond shares trading at a 45% discount to our $119 fair value estimate.