DA Davidson starts Beyond Meat at Underperform on addressable market concerns

DA Davidson analyst Brian Holland initiated coverage of Beyond Meat with an Underperform rating and $130 price target. The stock closed Thursday down 2%, or $2.71, to $160.97. The analyst, who thinks Beyond Meat has achieved a "significant breakthrough" in legitimizing the plant based meat category, say his thesis does not reflect a negative view of the company. Rather, he believes the total addressable market for U.S. plant based meat could be smaller than that of milk. While conceding the same ~50% of U.S. adults who have purchased plant based milk may be similarly interested in plant based meat, Holland thinks there are fewer who have to find a solution to animal meat as compared to milk based on non-meat eaters versus those who are lactose intolerant. This is important, as the 12% of plant based milk purchasers who buy once or more a week account for 62% of consumption, Holland tells investors in a research note. As such, the analyst's long term forecasts for the plant based meat market are lower than the consensus view.

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