4 Reasons Why This Monster Beverage Analyst Raised Their Price Target

Energy beverage maker Monster Beverage Corp MNST hosted a virtual annual general meeting this week that signaled the company is "going full beast mode," according to BofA Securities. 

The Monster Beverage Analyst

Peter Galbo maintained a Buy rating on Monster Beverage's stock with a price target lifted from $70 to $80.

The Monster Beverage Thesis

Monster Beverage's virtual meeting supported an incrementally bullish stance on the stock for four reasons, Galbo said in a Thursday note. (See his track record here.)

They are: 

1. Recent third-party data points suggest U.S. sales are seeing a re-acceleration as more states open up. Most notably, Nielsen data for the week ended May 16 shows a 2.3% year-over-year sales growth driven by the Reign brand.

2. The EMEA region experienced some bottler destocking activity in May, but more countries are opening up and management expects trends to improve moving forward.

3. The APAC region "opened more meaningfully" and Monster's sales teams are re-engaging bottlers across Japan, South Korea and China. These markets are the furthest along in their reopening process and previously planned offers for the back half of 2020 remain on track.

4. Finally, the LATAM region is mixed as Brazil and Mexico continue to struggle with the COVID-19 pandemic. But more stable markets like Chile are experiencing market share gains.

The research firm's revised $80 price target is based on 35 times 2021 estimated EPS and represents a 65% premium to the S&P 500 index and a 55% premium to the S&P beverages index. The premium valuation is justified as the COVID-19 disruption begins "to move into the rear-view," the analyst wrote.

MNST Price Action

Shares of Monster Beverage were trading down 1.39% at $71.50 at the time of publication Thursday.

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