On Tuesday, stocks across the board took a tumble, as the market’s post March surge came to a juddering halt. However, one of 2020’s highflyers was excluded from the rout.
Shares of plant-based meat producer Beyond Meat (BYND) bucked the trend by adding 7% of muscle in the day’s trading. All in all, the year has been a feast for BYND investors, who have accumulated gains of 82%.
The latest uptick came following the announcement of a deal to develop a production facility near Shanghai, China.
The agreement with Jiaxing Economic & Technological Development Zone (JXEDZ) will see the production facility manufacture plant-based beef, pork, and chicken catering to the Chinese market. Production will begin over the next few months and should be in full swing by early next year.
The announcement is not a surprise to Baird analyst Ben Kallo, as Beyond had previously set its sights on setting up manufacturing capacity in China before the year’s end. The 5-star analyst believes the agreement could be a catalyst for further developments in the region.
Kallo said, “We do view the announcement positively as it should help BYND better access the large (and growing) Chinese protein market and could help secure additional agreements in the Foodservice channel in the country. Notably, BYND will be the first global plant-based meat company to develop a production facility in China.”
Population growth is driving the global demand for protein, which Kallo notes is “growing steadily.” China is one of the world’s biggest protein markets and by 2025 is expected to make up roughly 35% of the market worldwide.
As well as providing Beyond with access to the broader Southeast Asia region, Kallo believes a manufacturing facility in the country “should expand market access and price competitiveness.”
The latest announcement builds on other recent Beyond Meat developments in China. The company made its first foray into the region in April, via a partnership with Starbucks. Additionally, a limited time offer launched in KFC, Pizza Hut, and Taco Bell restaurants (in a joint effort with Yum China) in Q2 “was received favorably and could be a driver of growth moving forward.”
To this end, Kallo rates BYND an Outperform (i.e. Buy) along with a $160 price target. This figure suggests a possible upside of 16% from current levels. (To watch Kallo’s track record, click here)
The rest of the Street is rather more conservative. Based on 2 Buys, 9 Holds and 5 Sells, BYND has a Hold consensus rating. The average price target hits $126.71, and implies shares will drop by 8% from current levels. (See BYND stock analysis on TipRanks)
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