Beyond Meat’s core problem is its product, says TD Cowen; sees high chance of another capital raise

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TD Cowen analysts told investors that there’s “nothing like the real thing,” also noting the fragility of the company’s financial situation.

“Management and the board have recognized the existential threat facing the business and are taking steps to preserve cash and stabilize sales,” they explained. “However, in our view, the fragility of the company’s financial situation and the weak consumption patterns in the meat alternatives category present too much risk.”

The analysts contend that the core problem for the company is the product, and it is losing market share in a declining refrigerated plant-based meat alternatives category.

“Management tried lowering prices to attract more consumers, but sales continued to fall. They are now pivoting to improving consumer perception of the health and environmental benefits of the plant-based category,” they added. “However, our proprietary consumer survey finds that consumers cite taste, aroma and texture of meat alternatives relative to the real thing – not price or health benefits – as their primary concerns.”

What’s more, the analysts said that the Beyond brand’s 500 bps market share decline over the past three years compared to Impossible’s 1,100 bps gain “suggests that consumers view Impossible as the better product.”

They went on to add there is a high likelihood of Beyond Meat requiring additional capital, which “is likely to weigh on investor sentiment.”