Monster Beverage Posts Sales, EPS Beat: 4 Sell-Side Takes

The market woke up Thursday to energetic interest in Monster Beverage Corporation MNST, which was surging after posting better-than-expected top-line results.

Monster reported 15.8-percent organic sales growth in the fourth quarter, and its earnings per share of 43 cents beat Street estimates.

The Analysts

• Macquarie Research analyst Caroline Levy maintained an Outperform rating on Monster with a $68 price target.
• Wells Fargo Securities analyst Bonnie Herzog maintained a Market Perform rating and raised the price target from $55 to $59.
• BMO Capital Markets analyst Amit Sharma maintained an Outperform and boosted the target price from $60 to $62.
• UBS Global Research Analyst Sean King, he bear of the bunch, has a Sell rating on Monster and lifted the price target from $48 to $52.

Macquarie

Macquarie expects strong sales growth for most of the year for Monster despite a weak January, Levy said in a Thursday note.

The analyst cited good underlying demand for the energy drink. Levy also likes the company’s introduction of some new products: performance energy drink Reign, which is set to launch in March to compete with BANG, and Dragon Tea.

Soft January sales created some value in a company from which investors should expect solid annual growth, she said.

Wells Fargo

Herzog liked Monster’s better-than-expected year-over-year international sales growth of 30 percent, but said Wells Fargo remains cautious due to pricing and competition from BANG and Red Bull.

Another concern: ongoing arbitration in a dispute with Coca-Cola Co. KO over the soft drink giant’s plan to launch energy drinks that was announced late last year.

BMO

Monster’s top-line beat shows why it “remains one of the most attractive growth investments in staples,” Sharma said in a Thursday note. A recent price increase and lower aluminum costs should lift margins, the analyst said.

“We continue to expect international markets to ramp up and contribute meaningfully to top-line growth, including increasing the footprint in China, along with solid sales momentum in the U.S.”

UBS

King doesn’t see much in Monster stock to be energetic about. 

“While [the fourth-quarter] topline soundly beat expectations, we see little change to a challenging 2019 setup,” King said in a Wednesday note. The analyst expects continuing U.S. market share loss to Red Bull and Bang, uncertainty around the Coca-Cola issue, various production cost headwinds and a China growth strategy he fears will yield profit losses through 2019, among other sticking points. 

Price Action 

Monster shares were up 9.75 percent at $64.46 at the time of publication Thursday. 

Related Links:

SunTrust Turns Bullish On Monster Beverage

As Coke Shakes Up Energy Drink Category, Monster Earns A Downgrade

Photo by Marcus Quigmire/Wikimedia.