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Beyond the meat
and
Campbell Soup
to have something in common. No, certainly not their growth patterns. Both were updated Tuesday by JP Morgan analyst Ken Goldman. And he improved both, partly because of the assessment.
Goldman raised its rating in Beyond Meat (symbol: BYND) to an overweight, JPMorgan's equivalent of Buy, of Neutral, to the equivalent of Hold, but raised its price target from just 1 USD to 189 USD. Nevertheless, $ 189 represents an increase of approximately 30% compared to Monday's closing price.
His opinion of Campbell Soup (CPB) is less optimistic. Stocks were upgraded to underweight at JPMorgan's equivalent of a sale. Goldman's price target has also been increased from $ 1 to $ 41 per share. This, however, represents a decline of about 5% from recent levels.
The story back. Obviously, both companies are at different stages of their life cycle. Campbell Soup was founded in 1869 and Beyond Meat in 2009.
Campbell Soup has a militant investor, Dan Loeb of Third Point, who encourages the company to do more than just sell assets. Campbell announced in July that he was selling Australian biscuits maker Arnott to a private equity firm
KKR
(KKR) for $ 2.2 billion. Loeb also wants the company to invest in its categories, such as soup, to boost sales growth.
Beyond meat, on the other hand, is developing rapidly and is a new category of food products, alternative meat. The company is expected to increase sales by more than 60% in 2020.
What's up. The evaluation is one of two improvements, but there are other reasons why Goldman sites explain the changes in its rating on Tuesday.
"We appreciate that the [Beyond Meat] the secondary supply has scared many investors, "wrote Goldman in a research report released Tuesday. "However, founder [and] CEO Ethan Brown has reduced very little of his assets and we can not blame the people involved before the IPO for making gains. "
Beyond Meat announced a stock sale by initial investors and insiders at the end of July, when the company announced its results for the second quarter. This decision surprised Wall Street, as most market participants did not expect a sale until October, when most insider-owned stocks are free of the so-called lock-in. period following an IPO where insiders are prohibited from selling shares. Beyond Meat shares are down about 35% since the announcement of the secondary offering. Goldman thinks now is the time to return.
For Campbell, Goldman believes there is less price risk on stocks now. "When we went to a subweight rating [in August 2018], Campbell traded to a [premium valuation] to the group, the highest of all periods in the last two years, "writes Goldman. "Today, it is at a [group discount]Which is more reasonable, in our opinion. Goldman also believes that more innovation and better marketing could boost soup sales.
Look forward. Campbell negotiates for just under 17 times the estimated gains for 2020. Other food stocks in the
S & P 500,
for comparison, negotiate estimated earnings estimates for just over 17 times.
The valuation of Beyond Meat is more difficult to compare because the company is not profitable and negotiates multiples that are not found in the world of packaged foods. Of course, Beyond Meat is a growing company and its valuation has declined with the course of its action. Beyond meat, stocks are trading for around 25 times the estimated sales for 2020, compared with around 37 times sales.
Overall, food stocks have been good so far. Beyond Meat shares rose approximately 480% from the IPO price of $ 25, making it the best-performing introduction of the year. Campbell Soup shares have increased more than 30% since the beginning of the year, more than the 12% change observed
Dow Jones Industrial Average.
And, in the case of Beyond Meat, Goldman thinks the winnings will continue.
Beyond the meat was up $ 11, or about 7.7%, in pre-market trade. Campbell soup grew by 30 cents, or about 0.7%.
Write to Al Root at [email protected]
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