On Monday, Barclays continued to express a cautious stance on Beyond Meat Inc . (NASDAQ:BYND), maintaining an Underweight rating with a $5.00 share price target. The firm highlighted concerns about the company's high cash burn rate and the increasing possibility of a capital raise that could dilute the value for current shareholders.
Beyond Meat's current financial strategy, as outlined in its latest 10-K filing, suggests that while existing cash balances and cash flow from operations are expected to support the company through the next twelve months, additional capital will likely be sought in 2024. This may involve issuing debt or equity securities, which could lead to dilution for stockholders and potentially affect the stock's market price.
Barclays analysts project that Beyond Meat may need a $250 million equity capital injection, which could be significantly dilutive given the company's current market capitalization of approximately $500 million.
The possibility of raising funds through another debt-like instrument was mentioned, but this would presumably require Beyond Meat to achieve free cash flow (FCF) neutrality and generate sustainable EBITDA for consecutive quarters. The firm views this scenario as unlikely for 2024.
The analyst from Barclays pointed out that despite Beyond Meat's efforts to revamp its business strategy, the high cash burn and potential need for capital raise remain key concerns. They foresee a high likelihood of a dilutive event in the coming months, which underpins their decision to stay Underweight on the stock with a set price target of $5.00.
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