Canaccord Genuity Morning Coffee on Coca-Cola (KO) and Monster Beverage (MNST): No Caffeine 'Monster Mash' Up
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Price: $91.10 +0.66%
Rating Summary:
25 Buy, 11 Hold, 2 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
Rating Summary:
25 Buy, 11 Hold, 2 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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Canaccord Genuity Morning Coffee on Coca-Cola (NYSE: KO) and Monster Beverage (Nasdaq: MNST): No caffeine 'Monster Mash' up.
The Wall Street Journal reported Monday that Coca-Cola is in talks to purchase Monster Beverage in a move to expand its presence in the growing energy drink market, sending shares of Monster to a 52-week high in early trading. However gains were quickly erased before Monday’s close after Coca-Cola said that it was not looking at making the acquisition. Monster has experienced rapid growth of late, with Q4 sales increasing by 28% and net income improving by 31%. Currently, analysts are expecting revenue to grow another 17% this year. Sporting a P/E of nearly 30, some believe that the price of Monster is too high for the acquisition. Additionally, Coke already has an agreement to distribute some of Monster’s drinks, something which may diminish synergies created by an acquisition, reducing its willingness to pay a premium for Monster. Monster originally sought buyers last year, including Coke, Pepsi (NYSE: PEP) and other Asian companies; however sources say that pricing drove potential buyers away. While the energy drink market has been growing rapidly, it has come under scrutiny as politicians lobby for the FDA to take a closer look at the products and their nutritional claims. Currently, they are categorized as a nutritional supplement which means that they face less stringent regulations. Sources close to Monster have indicated that this has also pushed some potential buyers away from closing a deal.
The Wall Street Journal reported Monday that Coca-Cola is in talks to purchase Monster Beverage in a move to expand its presence in the growing energy drink market, sending shares of Monster to a 52-week high in early trading. However gains were quickly erased before Monday’s close after Coca-Cola said that it was not looking at making the acquisition. Monster has experienced rapid growth of late, with Q4 sales increasing by 28% and net income improving by 31%. Currently, analysts are expecting revenue to grow another 17% this year. Sporting a P/E of nearly 30, some believe that the price of Monster is too high for the acquisition. Additionally, Coke already has an agreement to distribute some of Monster’s drinks, something which may diminish synergies created by an acquisition, reducing its willingness to pay a premium for Monster. Monster originally sought buyers last year, including Coke, Pepsi (NYSE: PEP) and other Asian companies; however sources say that pricing drove potential buyers away. While the energy drink market has been growing rapidly, it has come under scrutiny as politicians lobby for the FDA to take a closer look at the products and their nutritional claims. Currently, they are categorized as a nutritional supplement which means that they face less stringent regulations. Sources close to Monster have indicated that this has also pushed some potential buyers away from closing a deal.
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