Beyond Meat (BYND) Rallies to 52-Week High

Beyond Meat, Inc. (BYND) rallied to a 52-week high on Tuesday after a press release touted a previously announced distribution deal with Dow component Walmart Inc. (WMT). The plant-based meat manufacturer is tripling distribution of the popular Beyond Burger to more than 2,400 stores nationwide and is bringing Beyond Breakfast Sausage to over 2,200 stores. Beyond is the top selling "all-refrigerated plant-based meat" brand, according to a recent industry survey.

Key Takeaways

  • Beyond Meat stock has lifted to a 52-week high, underpinned by major distribution deals.
  • Accumulation readings have also hit new highs.
  • The rally could add another 35 to 40 points, into the $200 level.
  • Wall Street has remained skeptical about the company's outlook, despite the advance.

The news follows expansion deals with The Kroger Co. (KR), Target Corporation (TGT), and other big chains, ensuring a strong growth curve into 2021 and beyond. Investors have taken note, more than tripling Beyond Meat's stock price since March, when a steep decline ended within three points of the all-time low in the $40s, posted during the May 2019 initial public offering (IPO). Beyond Meat is now well positioned for further gains that could eventually reach July 2019's all-time high at $239.71.

This week's uptick has shaken off a recent JPMorgan downgrade from "Neutral" to "Underweight." Even so, Wall Street continues to question the long-term outlook, posting a "Moderate Sell" rating based upon two "Buy," seven "Hold," and six "Sell" recommendations. Price targets currently range from a low of $81 to a Street-high $180, while the stock is set to open Wednesday's session just $16 below the high target.

The unusual divergence between analysts and investors will work out of the system at some point, either through a series of upgrades and higher price targets or weak growth metrics that bring the money-losing but rapidly growing company back to earth. Even so, it will be hard to relieve Wall Street skepticism after big investors rushed to dump shares and take windfall profits less than three months after the 2019 offering.

Divergence is when the price of an asset is moving in the opposite direction of a technical indicator, such as an oscillator, or is moving contrary to other data. Divergence warns that the current price trend may be weakening and in some cases may lead to the price changing direction.

Beyond Meat Daily Chart (2019 – 2020)

Beyond Meat came public at $46.00 in May 2019 and took off for the heavens in a momentum-fueled trend advance that accelerated in June. The rally posted an all-time high at $239.71 in late July, giving way to a steep pullback that completed a bearish topping pattern in October. Price action then broke range support near $140, generating a major selloff that initially found support in the low $70s in the fourth quarter.

A bounce into February ended with a secondary decline that settled in the upper $40s in March. Committed buyers then reloaded positions, lifting the stock back to new resistance at the broken top. It crisscrossed that level multiple times into September and pressed above the June peak at $161 on Tuesday. There are no guarantees that this rally wave will succeed, but now is a perfect time to watch the stock, looking for follow-through above this week's high at $170.45.

The on-balance volume (OBV) accumulation-distribution indicator tells a bullish tale in this regard, posting a higher March low and then breaking out to a new high in May. OBV surged higher once again earlier this month and has hit another new high this week. This bullish sponsorship should generate the tailwind needed to lift the stock well above mid-year range resistance and into the $200 level.

Accumulation can refer to the overall addition of positions to a portfolio. It can also refer to a general increase in buying activity in an asset. In this case, the asset is said to be "under accumulation" or "being accumulated."

The Bottom Line

Beyond Meat stock has posted a 52-week high on excellent buying volume this week, raising the odds for continued upside to $200.

Disclosure: The author held no positions in the aforementioned securities at the time of publication.

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