Beyond Meat Rallies, but One Analyst Sees Room for Disappointment

By Yasin Ebrahim

Investing.com - Beyond Meat (NASDAQ:BYND) climbed 4% on Tuesday, but one analyst on Wall Street is worried that its guidance could disappoint investors who are betting big that McDonald’s (NYSE:MCD) may roll out the company's plant-based burgers in the U.S.

With just a little more than a week to go until Beyond Meat (NASDAQ:BYND) reports fourth-quarter results on Feb. 27, Oppenheimer said it has "less conviction" in the run-up to the plant-based company's quarterly report, given the "seemingly high expectations of a potential U.S. McDonald’s (NYSE:MCD) win but still very high short interest levels north of 40%."

In September last year, McDonald’s (NYSE:MCD) said it would launch a Canadian trial of plant-based Beyond Burgers.

And investor hopes that the fast-food giant will trial the plant-based burger in the U.S. has driven Beyond Meat's shares up about 50% for the year so far, leaving room for disappointment, Oppenheimer warned.

"Management guidance typically includes only confirmed distribution wins. Therefore, we think there is risk of a potential below-consensus estimate guide even though the ultimate 2020 delivery could be higher."

There is more muted upside potential for the plant-based burger company, Oppenheimer said, citing a pricey valuation, increasing competition and the potential for new selling pressures following the expiration of the lock-up.