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Barclays downgrades Tyson Foods, Beyond Meat stocks

Yahoo Finance Live anchors discuss a new Barclays note on protein stocks.

Video transcript

- Tyson and Beyond Meat-- in particular this morning, they are both trading lower after being downgraded and also their price cut-- price targets being cut over Barclays. Both of them going to underweight from equal weight due, Barclays says, to the difficult outlook surrounding protein companies in general, although the downgrade didn't affect all of the protein companies in Barclays coverage there. But they said the worst is yet to come for most of the sector because price-conscious consumers are facing rising prices for a lot of these products as well as rising beef prices. So that's a challenge for some of these companies.

- I'm concerned of what the worst is yet to come would mean for Beyond Meat. You could argue they have seen the worst the past year as consumers have traded off that product and traded down to cheaper, regular alternatives, like regular chicken, regular beef. So that's a scary note from Barclays on Beyond and even, to a lesser extent, Tyson.

- You know, one of the interesting things-- I was looking back through the beyond earnings report as well, and they're actually down in, for the nine months that we've seen them report for thus far over the course of this fiscal year, they're actually down in every single category across US retail, US food service, and even international retail, food service. So negative-- well, just kind of negative percentages that you've got across the board. So, that is declines across the board there in their revenues.

But here's the interesting thing. They're actually up in some of those key categories in terms of the pounds sold by channel, which is interesting because it means that they're actually taking a severe discount for everything that they are producing. So the overproduction met with the lower prices that they're able to off-- or just sell through some of their own inventory that they're creating, that creates a longer term issue if you're Beyond Meat or Impossible Foods because that's a larger demand equation. And they had to cite that within their most recent earnings report as well.

They had talked about this on the call, just saying that current economic climate has not been kind to plant based meat. I mean, no crap. But honestly, it really is this question of whether or not this is a transitory period, and everybody hates that word when you hear it on an earnings call. But this doesn't necessarily have the same history in the meat environment in a cyclical or an economic downturn period as some of the more kind of historical meat, if you will historical.

- Historical meat. Yeah, I mean, we had tofurkey on our Thanksgiving table--

- Legendary meat.

- Legendary meat.

- OG meat. Classic meat.

- --for the vegetarian in our house. But I learned tofurky is made by a privately held company.

- Tofurky.

- Tofurky. It's not bad, actually. But anyway, it's by privately held company. But we saw Beyond Meat shares just now trading a little bit higher today. But the stock is down 80% year to date.

- You have a better idea than me probably, Julie. I saw two Beyond patties in Whole Foods for $5.75. That's pretty good. I mean, these used to sell for $8 a pop. Too expensive, though.

- Yeah, I guess that is. I mean, it's funny to me that they sell them as patties because you can buy the pound of the stuff, and it's-- well, I mean, I guess they do that with ground beef too. Like, it's so difficult to shape ground stuff.

[INTERPOSING VOICES]

- Nobody wants to do that.

- I guess not. You just wash your hands afterwards. It's-- but yes, that is certainly then when they first came out, that is a lower price than we saw the introductory price when Beyond Meat was the new hot thing--

- Gosh, that looks good.

- --on the market.

- Oh, those photos. Oh. Look, I like the plant-based food. Impossible. I like Beyond. To me, it tastes great.

- On your breakfast sandwich too?

- Yeah, anywhere I can get it. Yeah.