Shares of Beyond Meat Inc. soared in active Thursday trading, after McDonald’s Corp. said it will launch in Canada a test using a plant-based burger patty made by the company.
The burger is called the P.L.T., which stands for plant-lettuce-tomato, and will be sold in 28 restaurants starting Sept. 30 in southwestern Ontario. The trial is slated to run for 12 weeks.
Beyond Meat’s stock shot up as much as 16% before paring some gains to close up 11.6% at $154.34. Trading volume swelled to 8.1 million shares, compared with the full-day average of about 3.1 million shares.
Read more: Beyond Meat stock bulls got what they wanted, and bears could get slaughtered.
McDonald’s shares inched less than 0.1% lower to $212.60.
The P.L.T. will be made with a plant-based patty from Beyond Meat that has been crafted by McDonald’s, with no artificial colors, flavors or preservatives, and will feature a sesame seed bun. It will cost C$6.49 ($4.90), before tax.
“McDonald’s has a proud legacy of fun, delicious and craveable food-and now, we’re extending that to a test of a juicy, plant-based burger,” said Ann Wahlgren, McDonald’s vice president of global menu strategy. “We’ve been working on our recipe and now we’re ready to hear feedback from our customers.”
A McDonald’s spokesperson told MarketWatch that guests will be able to customize their P.L.T.s, by requesting to hold the cheese and mayo, or any ingredients. “[H]owever, the patty will be cooked on the same grill as other burgers, meat-based products and eggs,” a spokesperson said.
Beyond Meat did not respond to a request for comment.
McDonald’s is the latest fast-food chain to test plant-based meat items made by Beyond Meat. Yum Brands Inc.’s KFC piloted a Beyond Fried Chicken in Atlanta last month, CKE Restaurant’s Carl’s Jr. launched a Beyond Famous Star burger with cheese in Canada and Subway said it would test a Beyond Meatball Marinara in 685 restaurants in the U.S. and Canada.
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In July, Dunkin’ Brands Group Inc. said it would add a plant-based dining option from Beyond Meat to menus in Manhattan, and Del Taco Restaurants Inc. said in June that it will offer two new burritos containing Beyond Meat’s plant-based protein.
Jefferies analyst Kevin Grundy said that Beyond Meat’s partnership with McDonald’s has the potential to “significantly boost” sales if it is rolled out beyond the testing phase. He estimates that a shift of 1% to 6% of McDonald’s beef volume in the U.S. could add $50 million to $285 million to fiscal 2020 sales.
That’s not a given, however, as Grundy noted that Tim Horton’s recently allowed its “limited-time offer” of Beyond Meat products to lapse in restaurants outside of British Columbia and Ontario.
Grundy reiterated his hold rating and $152 stock price target, saying the current valuation “sets a high bar” for the stock.
Shares of Beyond Meat, which went public on May 2, have lost 5.3% over the past three months, but Thursday’s closing price was more than six-times the initial public offering price of $25. Read more about Beyond Meat’s biggest-popping IPO since 2000.
McDonald’s stock has gained 3.1% over the past three months and the Dow Jones Industrial Average has tacked on 1.4%.