![]() ![]() Investors are excited about Beyond Meat because it’s a pioneer in “plant-based meat” (PBM), targeting US meat-eaters for the first time with products that are meant to taste the same as the alternative. McDonald’s has since suggested that the burgers won’t carry the Beyond Meat branding – but as Morningstar’s Scheuneman says, “we think Beyond will be a primary supplier, as it helped to develop the product and few firms have enough capacity”. ![]() The “McPlant” is due this year and Beyond Meat’s shares surged in November 2020 when the announcement was made as investors assumed that the meat-free company had sealed a deal with the burger behemoth. While McDonald’s has long had a vegetarian option – we’ve written before on the battle of the fast food giants to keep up with changing consumer tastes – a vegan burger is the long-awaited “game changer” for the food industry. Valuation-wise, a lot hinges on the firm's partnership with wide-moat McDonald’s ( MCD), which Scheueneman says could be worth $180 million in annual sales for Beyond Meat and push its share price to $166. “Given the rapidly changing marketplace, we think it is too early to tell if Beyond’s first-mover advantage will result in a sustained market leadership position,” says Scheuneman. The company doesn’t have an economic moat yet, but is heading in the right direction. Such a gain often means the shares become quickly overvalued by Morningstar metrics, but analyst Rebecca Scheuneman puts the fair value at $146. Shares are now trading around $140, a mouth-watering return of 460% for those who got in at the IPO. Beyond Meat’s 2019 IPO attracted more than the usual hype, especially as the shares rallied from $25 to nearly $66 on the first day, a 163% gain.
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