Beyond Meat is an exciting story in the food business, best known for developing plant-based meats. This company produces meat from plants. It allows consumers to enjoy the same taste and texture as traditional animal-based products, but without sacrificing the nutritional benefits. Additionally, plant-based meat products have many environmental advantages.

Beyond Meat has surpassed $400 million in revenue last year, making it a strong industry leader. Beyond Meat is poised to increase its market share within the $1.4 trillion global meat sector.

Beyond Meat is the ideal vehicle to invest in this market. Beyond Burger is my favorite product and I’m a big believer in its future. However, future success and growth are difficult to predict. These are the reasons why I remain neutral on this stock. (See Beyond Meat stock charts on TipRanks)

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Is There Anything to Like?

Beyond Meat is not only a strong organic trend that has seen a rising number of people switch to plant-based meats from traditional meat products, but it also offers some great catalysts.

In particular, the company appears to lead the pack when it comes partnership with large players and chains of food, which could not only boost sales, but also help to strengthen the company’s brand. Beyond Meat is the preferred supplier to the McPlant, McDonald’s plantbased burger.

The company has also been expanding its partnership with Starbucks (NASDAQ:), with whom it is helping develop the Beyond Meat Breakfast Sandwich across the UK and in the Middle East.

I believe these relationships will develop into long term supply agreements as the products become more well-known. Indirectly, Beyond’s brand’s reputation and popularity are further validated by industry giants like McDonald’s (McDonald’s) and Starbucks (SBUX), who have included Beyond’s products in their menus.

Is there anything not to like?

Beyond’s market-leading position within a fast growing industry is indeed attractive. However, I am concerned about some other issues. First, competition. Beyond may have the advantage of being the first to market and has seen its brand grow successfully. But, it is possible that larger companies with more financial flexibility (i.e. having the option to make more) might catch Beyond as they move forward. For instance, Nestlé (NSRGF (OTC:)) is making good progress with its own plant-based burger.

Beyond Meat continues to lose money. It’s difficult to predict when solid profit will come in, if at all. With a gross margin of 30% already, there is little opportunity for the company to make a profit. In that regard, conglomerates such as Nestlé have a significant competitive advantage, as they can easily absorb higher development costs and scale their businesses to higher margins more easily.

Wall Street’s Take

Beyond Meat’s consensus rating is Hold. It was based on five Holds and zero Buys in the last three months. There has been one Sell. At $108.50, the average Beyond Meat price target implies 7.87% upside potential.

Disclosure: Nikolaos Sismanis didn’t hold any position at the time this article was published.

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