Monster Beverage Remains A Top Pick At Jefferies

Jefferies reiterated Monster Beverage Corporation MNST as a top pick Thursday.

According to the research report, Kevin Grundy, a Jefferies Equity analyst, sees “improving US results, sustainably strong international growth, the ability to offset unfavorable geographic mix, and M&A optionality should lead to continued outperformance.” Grundy has set a $63 price target.

Key Takeaways From The Report

• Grundy believes Monster’s recent improvements supports his U.S. sales forecast (between 5 and 7 percent), and he expects to see accelerated growth in the coming months.
• As Monster continues to gain market share and sustain mid-single-digit growth, Grundy sees management delivering strong international growth between 15 and 25 percent over the next five years.
• Grundy expects Monster to have unfavorable margins, but he believes this will be offset over time as the company continues to build and grow internationally.
• The Coca-Cola Co KO CEO, James Quincy, has re-prioritized growth and it has become more likely that Coca-Cola could acquire the remaining 82 percent of Monster shares. Grundy stated, “A deal at 25x EV/EBITDA (~$70/share) would be well received by KO’s investors and ~50-75 bps/low-single-digit % accretive to the co.'s org sales/EPS.”

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