Alternative Protein:
Looking Beyond the Beyond Meat Hype
Published October 14, 2019
Published October 14, 2019
KEY TAKEAWAYS
We initiate STARS coverage of Beyond Meat (BYND) with a Sell opinion and 12- month target price of $120, derived based on a DCF analysis as outlined below.
We forecast the global alternative meat market to grow to about $100 billion by 2030. We think larger packaged food companies will end up as the category leaders in the space given their vast global footprint and embedded relationships throughout the supply chain. Yet, we expect BYND to be the greatest disruptor in this space since no public packaged food peer comes close to BYND in terms of R&D spend as a percentage of sales.
Our 12-month target price of $120 represents an enterprise value that is 17.8x our 2020 sales estimate of $417 million. Packaged food peers on average trade at an EV/Sales ratio of about 2.9x. While it is reasonable for BYND to trade at a much higher multiple than packaged food peers, we think anything above 20x prices in extraordinary growth for an extremely long period.
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