Past Meat inventory tumbles as analysts fear about its long-term progress

Past Meat’s inventory cratered 17% in morning buying and selling Thursday as Wall Road voiced doubts over the corporate’s progress prospects.

The plant-based meat maker reported disappointing third-quarter outcomes after the bell on Wednesday. Its loss was wider than anticipated, whereas income fell wanting expectations, even after a warning from the corporate final month. Past additionally issued a dark outlook that indicated gross sales would not snap again instantly.

Jefferies known as it “the quarter that seemingly broke the camel’s again.” Bernstein analyst Alexia Howard downgraded the inventory, telling buyers to not purchase the dip.

“We view the outcomes as additional proof that Past’s enterprise is reaching market saturation sooner than anticipated and that the corporate has deeper issues that will not be straightforward to repair,” Credit score Suisse analyst Robert Moskow wrote in a notice.

Past blamed numerous components for its weak quarter, together with extreme climate, the delta variant and eating places’ labor challenges. CEO Ethan Brown advised buyers that the issues have been largely quick time period.

Nevertheless, analysts are extra skeptical. J.P. Morgan’s Ken Goldman quoted Maple Leaf Meals CEO Michael McCain, who advised buyers final week that the corporate is seeing a “marked slowdown” within the plant-based protein class, which might counsel a shift from the excessive progress charges anticipated by the business.

“We’re not but certain who is correct – Past Meat or Maple Leaf Meals – however once we hear commentary like this, it is onerous to be utterly assured about the way forward for the class,” Goldman wrote.

Brown additionally stated Wednesday night that he is optimistic about 2022. However the firm hasn’t satisfied analysts that is true. Financial institution of America Securities analyst Bryan Spillane wrote in a notice that subsequent 12 months’s outcomes will rely closely on the launch of McDonald’s McPlant burger and its partnerships with different nationwide chains, like Yum Manufacturers’ Pizza Hut. McDonald’s is presently conducting an operational take a look at of the McPlant in a handful of U.S. eating places and has begun promoting the burger in a couple of worldwide markets.

Spillane additionally stated an space of concern is that U.S. trial and demand of meat alternate options has slowed, significantly in grocery shops.

Jefferies analyst Rob Dickerson predicted the inventory will seemingly stay below stress till there’s a higher understanding of plant-based meat’s long-term growth, consumption charges and the aggressive panorama. Together with Thursday’s tumble, shares of Past have slid 38% this 12 months, giving it a market worth of $4.88 billion.