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Barclays cuts Beyond Meat and Tyson Foods as 'the worst is yet to come'

Stock Markets Nov 28, 2022 09:41AM ET
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© Reuters. Barclays cuts Beyond Meat (BYND) and Tyson Food (TSN) as 'the worst is yet to come'
 
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By Senad Karaahmetovic

Barclays analysts are growing increasingly cautious on protein companies and claim “the worst is yet to come.” The trough for this cycle may not come in 2023, as many predict, but actually, in 2024/2025, they said in a note.

Along these lines, the analysts downgraded Tyson Foods (NYSE:TSN) to Underweight from Equal Weight with a price target of $58 per share, down from $89. The analysts don't see enough chicken upside for TSN, at the same time when beef is contracting.

The move lower in TSN comes after the U.S. cattle/beef cycle analysis.

“Consumers globally are tightening their wallets, and we are seeing US consumers trading down to cheaper beef and chicken cuts, with some South American buyers switching out of these proteins entirely into eggs and beans, for example. Alternative meats may be less appealing for the same reason, given affordability issues. While inflation headwinds might abate in the medium term, we are modeling a further rise in ground beef prices to ~$6.50/lbs in 2025,” they said in a client note.

On the other hand, Beyond Meat (NASDAQ:BYND) has been downgraded on the back of deteriorating alternative meat economics. The lack of visibility also prompted the analysts to cut the price target to $10 per share, from $13.

“Although the company expects to turn cash flow positive by 2H23, we remain skeptical given current cash burn rates and a sizable net loss of over $100mn in 3Q22. Additionally, current market conditions create headwinds for BYND, as consumer trade downs and rising prices are affecting sales – a critical metric for a company looking to become cash flow positive in the near future, and a headwind to better operational leverage and thus improved pricing,” the analysts added.

Shares of Beyond Meat and TSN are down 3.3% and 2%, respectively, in pre-open Monday.

Barclays cuts Beyond Meat and Tyson Foods as 'the worst is yet to come'
 

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Comments (1)
Kris Jay
Kris Jay Nov 28, 2022 9:45AM ET
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hmm, consumers will not buy chicken but they will buy iphones or itunes?
First Last
First Last Nov 28, 2022 9:45AM ET
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AAPL targets the wealthier consumers.
Kris Jay
Kris Jay Nov 28, 2022 9:45AM ET
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First Last  by definition it can't be the wealthier consumers when 1/3 the country has an iphone.  122m iphone users in a population of 330m.   wealthy would be just 2% of 330m.    anecdotally, i can say i have met hundreds of people with iphones and they are not wealthy by any measure. The point of the statement you missed is that stocks are headed down, included AAPL. as when people can't afford chicken they also cant afford a new iPhone.
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First Last Nov 28, 2022 9:45AM ET
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Kris Jay   Many studies have been done on the demographics of iPhone users by many organizations.  Those studies disagree w/ you.
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First Last Nov 28, 2022 9:45AM ET
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Kris Jay   On average, iPhone users are significantly wealthier than non-iPhone users.
 
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