Yahoo Finanza Morgan Stanley Raises Monster Beverage’s Target Price to $106, Reiterates Overweight Rating
Morgan Stanley raised their stock price forecast on Monster Beverage to $106 from $101 and said they reiterate “Overweight” rating on the energy drinks company with higher visibility in near to long-term topline revenue upside, supported by more detailed analysis of LT topline growth drivers, including global category growth and international market share momentum.
On February 26, Corona, California-based beverage company, which is responsible for the manufacture, marketing and sales of energy drink brands such as Monster Energy, NOS, Full Throttle, and Relentless, reported quarterly earnings of $0.62 per share, higher than Wall Street’s consensus estimates of $0.57 per share.
That represents year-over-year growth of about 32% from $0.47 per share seen in the same quarter a year ago.
Monster Beverage’s revenues surged over 17% to $1.2 billion during the quarter ended December 2020, beating the Zacks consensus estimate by 5.51%, compared to year-ago revenues of $1.02 billion.
“We also see ample room for upside in Q2 as Monster Beverage (MNST) cycles negative COVID-19 impacts from 2Q20 and view consensus as too low with implied 2-yr avg, organic sales growth of +10%, well below 21% in January, and 13.3% in H2. We note one caveat, that our revenue upside estimates are tempered by below-consensus gross margin estimates on the EPS line with negative geographic mix and aluminum cost pressure, but we still see EPS upside,” said Dara Mohsenian, equity analyst at Morgan Stanley.
“We also remain confident in our +11.5% long-term topline forecast, which is above the ~8% growth the market is pricing in on a DCF basis and 9% consensus, driven by: (a) a robust global energy drink category growth, aided by favorable demographics (skew to younger age groups), strong pricing power, and recent expansion of the category with emerging healthier/fitness-oriented products; (b) expanding international market share as MNST’s strong historical trends show no signs of slowing, and Monster expands its fuller portfolio to store shelves; and (c) rebounding MNST US share trends as the Bang competitive threat recedes and MNST innovation re-accelerates.”
Monster Beverage’s shares, which surged 45% in 2020, slumped about 8% so far this year. On Monday, the stock closed 1.48% lower at $85.14.
Fourteen analysts who offered stock ratings for Monster Beverage in the last three months forecast the average price in 12 months at $103.46 with a high forecast of $115.00 and a low forecast of $94.00. The average price target represents a 21.52% increase from the last price of $85.14. Of those 14 equity analysts, 11 rated “Buy”, three rated “Hold” while none rated “Sell”, according to Tipranks.
Morgan Stanley also gave a target price of $125 under a bull scenario and $67 under the worst-case scenario.
Other equity analysts also recently updated their stock outlook. Monster Beverage had its price target increased by Credit Suisse Group to $115 from $110. They currently have an outperform rating on the stock. Jefferies Financial Group boosted their price objective to $96 from $94 and gave the company a buy rating.
Moreover, Stifel Nicolaus boosted their price objective to $105 from $91 and gave the company a buy rating. Sanford C. Bernstein set a market performance rating and a $100 price objective. Truist boosted their price objective to $105 from $95 and gave the company a buy.
“Topline Re-accelerating Post COVID-19 Impacts: We forecast Monster Beverage (MNST) U.S. topline re-accelerating to HSD% growth in 2021 and beyond after a strong 2H20, also confirmed by a recent US scanner data recovery and a stronger innovation pipeline in 2021, as well as robust international growth of 17% long-term driven by strong category growth and MNST share gains. We expect low-MSD revenue upside vs consensus in the next couple of years,” Morgan Stanley’s Mohsenian added.
“Compelling Valuation: We believe MNST’s valuation looks compelling, with our 11.5% LT topline growth forecast above the HSD rate the market is pricing in from an implied DCF standpoint and consensus forecasts.”
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This article was originally posted on FX Empire
