Pricing pressure in the pork market is likely to spill over into the broader meat industry, including beef, sending the price of regular burgers up in the interim.
Given all of the uncertainty in the global economy, one thing is certain – people need to eat. That’s why as we head into 2020, it might be a good idea to explore the status of food stocks that investors could be devouring in the new year.
One such stock that has certainly capture the attention of Wall Street bulls and bears alike is Beyond Meat (NASDAQ: BYND). Love it or hate it, BYND has made its mark on the IPO market and has taken investors on a wild roller coaster ride in 2019. Now, the company could benefit from an unlikely catalyst in the new year, one that might make its plant-based burgers more appealing to meat eaters.
According to research by analyst firm Bernstein cited in reports, it comes down to a “pork shortage” resulting from Africa Swine Fever, which has been spreading like wildfire in China. The country is responsible for about half of the world’s pork production, and roughly 50% of its pork herd is now gone.
So what does this have to do with Beyond Meat? Well, the pricing pressure in the pork market is likely to spill over into the broader meat industry, including beef, sending the price of regular burgers up in the interim. As consumers look for less pricey alternatives as a result of the sticker shock, they could flock to something different like Beyond Meat burgers. According to the Bernstein report:
Linked to this major dislocation due to African Swine Fever in the global meat industry, we expect that the plant-based meat and other plant-based categories will continue to do well, as prices for plant-based products start to look cheaper than elevated animal meat prices.
Bernstein has a $106 price target on BYND, representing roughly 40% upside in the stock. Meanwhile, Beyond Meat shares have already rallied approximately 200% from the IPO price, which in a year of ride-share and gig-economy stock market failures is hard to ignore.
Indeed, it’s not like 2019 has been the year of the IPO. While Beyond Meat has soared, other new stocks including Uber and Lyft are down more than 30% from their respective IPO prices.