Beyond Meat Is Ripe For A Short-Squeeze
Beyond Meat (NASDAQ: BYND) is sitting on a 38% short interest ahead of its Q1 earnings release and that leads us to believe the stock could pop in the wake of the results. The short-interest is driven by a very negative sentiment that views the company as unprofitable even in the face of growing consumer demand. With the institutional and insider holdings as high as they are, it won’t take much of a beat to get the market moving and a short-squeeze is a very real possibility.
The institutions have been net buyers for the last 3 quarters and hold more than 67% of the stock. The institutional activity hit a peak in Q1 when they picked up a full 30% of the company so someone thinks it is a value at these levels. Institutional activity has slowed in Q2 to date but remains net bullish and we think it will pick up in the wake of the report. As for the insiders, they hold another 7.9% of the stock and they aren’t selling. There have been some small sales over the past two or three quarters but those are nothing compared to the company’s available shares or market cap.
The analysts are another potential catalyst for the stock. They rate the stock a weak Hold with a price target that has been trending lower in the 12, 3, and 1-month comparisons. This trend has been aiding the downtrend in share prices but may come to an end if the test launches of the McPlant Burger and KFC’s meatless chicken nuggets were successful. The takeaway here is that even though the Insidertrades.com consensus figure has been trending lower it is still more than 70% above the current price action and the high price target of $100 is still relatively recent if issued at the end of 2021. The low price target, which was issued at the end of March, assumes the stock is fairly valued.
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The Analysts Have Set A Low Bar For Beyond Meat
The analysts have set a very low bar for Beyond Meat based on increasing competition and a lack of confidence in the McPlant and KFC nugget results. Fully 10 of the 16 analysts covering the stock have lowered their EPS target, revenue target, or both in the last 90 days with the most recent coming in just days ahead of the report. As it is, the analysts are expecting to see revenue rise very modestly versus last year and for EPS to contract more than 100% on rising costs. In our view, the company should easily beat the top-line estimate but we have some concerns about the bottom line. The company has been raising prices to combat inflation but it may not be able to offset price pressures and get the company back on the road to profitability. Beyond Meat tends to beat its top-line consensus estimate but has missed on the bottom line for the last 6 consecutive quarters.
The Technical Outlook: Beyond Meat Is Ripe For Rebound
The chart of Beyond Meat is ripe for a rebound and we are sure that shareholders are ready for one as well, the question is if there will be one or not. The 28% short interest and low bar set by the analysts have the stock set up for a squeeze but there are risks. Price action has yet to show signs of bottoming despite divergences in the MACD and stochastic that suggest the downtrend is overextending. This situation could go on for some time if there is not a catalyst for the bulls but, if it did, it would only increase the potential for a rebound when it comes. If the market is able to rebound, resistance is likely at the short-term moving average or slightly below that at the $40 level. It would take a move above that level, however, with a confirmation of reversal to get us interested in buying this name again.
Companies in This Article:
|Company||Current Price||Price Change||Dividend Yield||P/E Ratio||Consensus Rating||Consensus Price Target|
|Beyond Meat (BYND)||$25.66||+7.2%||N/A||-6.37||Hold||$42.63|