(Reuters) -Shares of Beyond Meat Inc surged 19% in early trading on Friday as the plant-based meat maker’s results indicated that its cost-control measures were finally bearing fruit.
Beyond Meat’s shares, which were trading at $20.42, had slumped about 65% in the past twelve months, hammered by a string of downbeat results and forecast cuts stemming from a collapse in demand for faux meat and elevated freight and raw-material costs.
At least four brokerages lifted their price targets on Beyond Meat’s shares after the company on Thursday topped expectations for quarterly sales for the first time since June 2021 and forecast annual revenue slightly above estimates.
To stem its mounting losses, the California-based company cut 200 jobs, tightened its sourcing network, restructured certain contracts and ramped up automation in its manufacturing processes.
“Beyond Meat deserves credit for becoming more disciplined regarding profits and cash,” J.P. Morgan analyst Ken Goldman said.
The company expects operating expenses to fall 22% this year, compared to a 9% rise in 2022.
Still, analysts cautioned that the demand for plant-based meat remained weak, and that Beyond Meat faced a long road to profitability.
“We are encouraged by tighter cost management, but for us to become constructive, demand will have to increase – on this, we remain skeptical,” Cowen analyst Brian Holland said.
Analysts hold a largely bearish view on Beyond Meat, with seven of 17 brokerages covering its stock rating it “sell” or lower, and 10 giving it a “hold” rating, according to Refinitiv data. It has a median price target of $12.50, which is 27% below the stock’s last closing price.
“This was another cautiously more positive quarter, although the company is by no means out of the woods yet,” Bernstein analyst Alexia Howard said.
(Reporting by Deborah Sophia in Bengaluru; Editing by Saumyadeb Chakrabarty and Pooja Desai)
