Credit Suisse Calls Monster Beverage An 'Unleashed Beast With Plenty Of Room To Run'

Monster Beverage Corporation MNST has “exceptionally strong” fundamentals, according to Credit Suisse's Laurent Grandet, given the popularity of energy drinks, particularly among millennials.

Grandet initiated coverage of the company with an Outperform rating and price target of $187.

‘Plenty Of Room To Run’

“We expect strong growth to persist and even accelerate for Monster in the coming years as it continues to broaden its range and expand geographically thanks to The Coca-Cola Co KO's distribution system,” the analyst mentioned.

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The energy drink category has been growing at 5 percent, and Grandet expects Monster Beverage to continue to gain share from its “only serious” global competitor, Red Bull.

In fact, the analyst pointed out that Monster Beverage was now the U.S. volume leader and was closing the gap in terms of value share, driven by its broad c-store distribution and the recent shift to increasing its base across other retail channels as well.

The Coke Deal

“In our view, the Coke deal unlocks a number of promising growth avenues where Monster was previously weak, including on-premise and international. Coke is the global leader in on-premise and has immense global scale in terms of distribution, both of which we expect Monster to fully leverage,” Grandet went on to say.

The analyst estimates the Coke deal had the potential to add $500 million in sales or almost 50 percent of Monster Beverage’s future growth.

Full ratings data available on Benzinga Pro.