Earnings Outlook: Beyond Meat earnings preview: McDonald’s trial run doesn’t guarantee the meatless burger a spot on the menu

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Beyond Meat Inc. is scheduled to report third-quarter earnings on Monday after the closing bell, and analysts will be looking for discussion of how the plant-based-meat powerhouse will keep the growing.

A big reason to be bullish about Beyond Meat BYND, -0.88% is the recently announced test at fast-food giant McDonald’s Corp. MCD, -0.72%  . That news caused shares to pop in late September.

Read: Beyond Meat’s stock soars after McDonald’s unveils test of ‘P.L.T.’ burgers

“At this stage, this is bigger news for Beyond Meat than McDonald’s, but demonstrates the willingness of restaurant concepts to add plant-based products and bodes well for longer term availability,” wrote Cowen analysts in a report titled “Restaurants Should Root for Plant-Based Proteins.”

But Jefferies analysts note that not every restaurant operator that runs a Beyond Meat pilot puts it on the menu longer term.

“McDonald’s participation with Beyond Meat has the potential to significantly boost Beyond Meat sales if it is rolled out beyond the test phase,” Jefferies said. “That said, it is worth noting that quick-service restaurants have not always adopted Beyond Meat product following the testing phase, with Tim Hortons having recently allowed its ‘limited-time offer’ of Beyond products to lapse in restaurants outside of British Columbia and Ontario.”

Tim Hortons is part of the Restaurant Brands International Inc. QSR, -0.73% portfolio.

Jefferies rates Beyond Meat stock hold with a $190 price target.

Beyond Meat has made headlines thanks to the growing number of fast-food chains that are piloting or permanently adding Beyond Meat products to the menu.

Dunkin Brands Inc. DNKN, -0.16% is adding the Beyond Meat sandwich it piloted in New York City at 9,000 U.S. locations on Nov. 6.

The meatless-chicken pilot that Yum Brands Inc. YUM, +0.14% chain KFC added to the menu sold out in five hours.

And Beyond Meat has turned up on menus for Subway, Uno Pizzeria & Grill and at the Bistro Bar at the Courtyard by Marriott MAR, +1.51%  .

But as Beyond Meat and its plant-based brethren become bigger sales drivers, other companies are jumping into the space. This prompted the sell initiation at CFRA.

See: Beyond Meat initiated at sell as large competitors make gains in plant-based food

“While Beyond Meat is well-positioned to benefit from this movement, investor expectations seem overly optimistic, evidenced by a more than 400% share-price appreciation since the company’s $25 IPO in late May,” wrote Arum Sundaram in the CFRA note.

“Over the recent months, several large packaged food companies have entered this space and introduced competing plant-based products. Also, Impossible Foods, Beyond Meat’s food tech rival, recently entered the $95 billion U.S. meat retail market to compete head on with Beyond Meat.”

Bernstein analysts predicted there will be upside to Beyond Meat’s 2019 sales guidance because of these restaurant partnerships. “Specifically management expected sales to exceed $240 million in fiscal 2019, which could be conservative as it does not include the incremental revenue from potential new food service and retail partnerships, like Dunkin’ Donuts, McDonald’s and HelloFresh,” analysts wrote. “Investors will want to hear an update on the competitive landscape, especially after Impossible Foods launched in retail.”

FactSet is guiding toward fiscal 2019 sales of $264.9 million.

Bernstein rates Beyond Meat shares market perform with a $130 target price.

Beyond Meat’s stock has an average hold rating and an average target price of $139.73, according to the dozen analysts polled by FactSet.

Also: Chipotle’s carne asada supply is running low, bringing the limited-time offer to an early end

Here’s what to watch for in Beyond Meat earnings:

Earnings: FactSet is pointing to earnings per share of 4 cents.

Estimize, which crowdsources estimates from sell-side and buy-side analysts, hedge-fund managers, executives, academics and others, expects per-share earnings of 6 cents.

Beyond Meat missed the consensus earnings forecast in the last quarter, reporting wider-than-expected losses of 24 cents per share.

Sales: FactSet forecasts third-quarter sales of $82.2 million.

Estimize expects sales of $84.38 million.

Beyond Meat has exceeded sales expectations in its previous two earnings reports.

Stock price: Beyond Meat stock has tumbled nearly 55% over the past three months. The S&P 500 index SPX, +0.41% is up 0.6% for the period.

Other items:

• Key to Beyond Meat’s success so far is not just the willingness of consumers, particularly meat-eating ones, to try the meat alternative, but the “retrial rate,” according to Cowen analysts.

Cowen data show that both Beyond Meat and its fellow plant-based-meat leader Impossible Burger have a 79% retrial rate among omnivores.

And when these customers see a Beyond Burger or Impossible Foods item on a restaurant menu, 77% of consumers Cowen surveyed say it’s a compelling reason to go back to that restaurant.

Don’t miss: McDonald’s expected to jump into the chicken-sandwich war next year: KeyBanc

• Some brands will be a competitive threat, but it will take time, according to Bank of America Merrill Lynch analysts.

“In the case of both Conagra Brands Inc. CAG, -0.63% and Kellogg Co. K, -1.25% we believe that reinvigoration of long-held brands (Gardein and Morningstar Farms, respectively) will likely require an extended timeline to create a product comparable to Beyond Meat of Impossible Foods,” analysts said.

Bank of America rates Beyond Meat shares neutral.

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