Monster Beverage (MNST): Survey Points to Reasonable Expectations, Raising PT - Jefferies
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Jefferies analyst, Kevin Grundy, reiterated his Hold rating on shares of Monster Beverage (NASDAQ: MNST) after a US focused survey reflects an encouraging increase in penetration rates. The analyst expects some near-term slowing from dissipating pricing however. This should limit the lift from Mutant/Hydro launches. Great story, though at 35x EV/ULFCF, risk-reward looks balanced.
The US Consumer Survey reflects: (i) increasing penetration rates (20% vs. 17% in ’14); (ii) energy drink infringement on more “need states," and (iii) declining “negatives” (owing to relative quiet in D.C.) opens up the possibility to penetrate the ~35% of non-energy drink consumers under an admittedly unlikely "blue-sky" scenario. However, there could be some near-term slowing in the category which would limit the lift from Mutant/Hydro launches.
The price target goes to $175.00 (from $162.00).
Shares of Monster Beverage closed at $159.71 yesterday.
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