- A partnership with McDonald's could add roughly $168 million to Beyond Meat's sales, a 62% boost, according to a Tuesday note from Alexia Howard at Bernstein.
- McDonald's has been testing a sandwich with a Beyond burger in Canada, but hasn't said yet if it will offer the burger elsewhere. Bernstein says there's a 50% chance of a US roll out.
- A partnership with McDonald's could boost Beyond Meat shares by 30%, a May note from Jefferies said.
- Watch Beyond Meat trade live on Markets Insider.
If McDonald's decides to rollout the PLT - a plant, lettuce and tomato sandwich that uses a Beyond Meat patty - in the US, it could boost Beyond Meat's sales by 62%, according to a Tuesday note from Bernstein.
Here's how a team of analysts led by Alexia Howard arrived at the "blue-sky scenario" number.
First, they estimated that McDonald's pays beef suppliers roughly $1.7 billion on an annual basis. Then, they assumed that having a Beyond Meat burger on the menu would take about 10% share from McDonald's beef supply.
That means that a full partnership with McDonald's would add about $168 million in incremental sales to Beyond Meat, the analysts said. That's a 62% increase to Beyond's full-year 2019 sales guidance of between $265 million and $275 million.
McDonald's has been testing the Beyond PLT in stores in Ontario, Canada, but has not yet announced if the test will lead to a rollout in other provinces or if the PLT will be available in the US anytime soon.
Howard wrote that there's a 50% chance that McDonald's will roll out the PLT in the US. She upgraded Beyond Meat to "outperform" and maintained her price target of $106 because of the upside of a McDonald's deal.
A potential deal with McDonald's has been on Beyond Meat investors' minds for some time. In May, analysts at Jefferies said that a partnership with McDonald's could add more than $25 to Beyond Meat's stock price, which is a boost of about 30%. And, when McDonald's announced the PLT test in Canada, Beyond Meat shares gained as much as 13%.
Still, it is possible that McDonald's could decide not to continue with the PLT after the trial.
"The initial feedback has been largely positive, although it seems that the trial has not been a blowout success thus far that justifies an immediate nationwide rollout across both Canada and the U.S," Howard wrote in the note.
Not all of Beyond Meat's trials have been successful. Tim Hortons recently announced it would discontinue its Beyond Meat breakfast sandwiches in all Canadian provinces except British Columbia and Ontario, sending Beyond shares down 7%.
Beyond Meat is up 228% year-to-date.
