D.A. Davidson gave Beyond Meat an underperform rating as the plant based meat industry will be smaller than the plant based milk industry.
The firm says the plant based meat industry could end up smaller than the plant based milk industry.In this photo illustration, packages of Beyond Meat "The Beyond Burger" sit on a table, June 13, 2019 in the Brooklyn borough of New York City.Investors have overestimated the potential size of the the planet-based meat industry, which could end up smaller than the plant-based milk industry, according to D.A. Davidson..
"Our cautious approach to the total addressable market — specifically, fewer likely frequent purchasers of plant based meat as compared to milk given roughly half the number of non meat eaters versus lactose intolerant—informs long term forecasts we believe are lower than the consensus view," said D.A. Davidson senior research analyst Brian Holland.
Shares of Beyond Meat have soared nearly 550% since its initial public offering in April, as investors bank on the plant-based meat industry reaching billions of dollars. Holland says some firms' long term forecasts are too high as the total addressable market for plant based meat in the U.S. could end up being smaller than that of milk alternatives.
Holland said he estimates the same 50% of American adults who purchase plant-based milk are also interested in plant based meat; however, only half of the groupIn term of competition, Beyond Meat has a "decided edge" with its fast growing retail distribution and strong visibility. But Holland said larger players with more resources are likely to enter the space.Shares of Beyond Meat ticked 3% lower in premarket trading on Friday.
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