Argus downgrades Beyond Meat on weak demand and balance sheet concerns

Investing.com -- Argus cut its rating on Beyond Meat to Sell from Hold, citing persistent demand challenges, slowing sales, and a weak balance sheet despite the company’s better-than-expected second-quarter results.

In its latest note, Argus said Beyond Meat shares “have underperformed over the past three months, falling 23% compared to a gain of 9% for the S&P 500 and a decline of 1% for the industry ETF IYK.”

The analysts acknowledged that the company’s 2Q25 results beat consensus expectations but argued that fundamentals remain pressured.

“BYND sells plant-based alternatives to meat at retail outlets and faces challenges from lower demand for plant-based protein amid uneven economic conditions, as many customers are trading down to cheaper proteins,” Argus wrote.

It also highlighted “increased competition, adverse changes in consumers’ perceptions about the health attributes of BYND products and … termination fees from co-manufacturers.”

Margins have come under pressure from “lower volume and rising input costs,” according to the note.

The analysts explain that management has sought to control expenses by discontinuing underperforming products and cutting jobs, including a 6% workforce reduction in August that amounted to 44 employees.

However, Argus said, “these actions so far have not been able to offset rising prices and declining volume.”

From a technical perspective, the analysts observed that “BYND shares have been in a bearish pattern of lower highs and lower lows since August 2022.”

“Based on current challenges and slowing sales, not to mention BYND’s weak balance sheet, we believe a SELL rating is appropriate,” Argus concluded, while noting it could revisit the rating “on sustained demand recovery and margin improvement.”

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