Goldman Keeps Top Rating on Monster Beverage (MNST); a Trough in Data, Regulatory Fears Overdone
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Price: $54.72 +1.84%
Rating Summary:
21 Buy, 10 Hold, 1 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 13 | Down: 11 | New: 14
Rating Summary:
21 Buy, 10 Hold, 1 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 13 | Down: 11 | New: 14
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With shares of Monster Beverage (NASDAQ: MNST) getting raked through the coals the past few weeks, analyst at Goldman Sachs have come out to defend the stock and put things into perspective. The firm reiterated their Conviction Buy List rating but trimmed their price target from $79 to $75.
Regulatory fears have driven Monster Beverage's multiple down to 23- 24X NTM P/E from the peak of 34X, the analyst notes. While trading could be choppy near term, the firm is confident in their top rating citing (1) upcoming c-store data could mark the trough for MNST's US sales growth; (2) we see the potential for sentiment to improve on new product news and reassuring 3Q12 earnings; and (3) at this stage we are less convinced of an onerous regulatory outcome.
Friday's (9/21) c-store data will likely be soft due to a very touch comp the firm notes. They see the number perhaps even below 10 percent. While the optics of another month of deceleration could disappoint investors, Goldman cautious concluding that the slowdown points to evidence of category/brand maturation. Instead, near-term volatility in MNST shares could provide an attractive entry point. "We see the potential for MNST to re-rate higher on new product news and 25%-plus EPS growth in 2H12 that, in our view, should re-assure investors the strong growth outlook remains intact."
On the regulator fears, the firm said they are overdone and believe the the most likely regulatory outcome on energy drinks will probably be a benign one - e.g. caffeine disclosure, additional warning labels.
For an analyst ratings summary and ratings history on Monster Beverage click here. For more ratings news on Monster Beverage click here.
Shares of Monster Beverage closed at $53.77 yesterday.
Regulatory fears have driven Monster Beverage's multiple down to 23- 24X NTM P/E from the peak of 34X, the analyst notes. While trading could be choppy near term, the firm is confident in their top rating citing (1) upcoming c-store data could mark the trough for MNST's US sales growth; (2) we see the potential for sentiment to improve on new product news and reassuring 3Q12 earnings; and (3) at this stage we are less convinced of an onerous regulatory outcome.
Friday's (9/21) c-store data will likely be soft due to a very touch comp the firm notes. They see the number perhaps even below 10 percent. While the optics of another month of deceleration could disappoint investors, Goldman cautious concluding that the slowdown points to evidence of category/brand maturation. Instead, near-term volatility in MNST shares could provide an attractive entry point. "We see the potential for MNST to re-rate higher on new product news and 25%-plus EPS growth in 2H12 that, in our view, should re-assure investors the strong growth outlook remains intact."
On the regulator fears, the firm said they are overdone and believe the the most likely regulatory outcome on energy drinks will probably be a benign one - e.g. caffeine disclosure, additional warning labels.
For an analyst ratings summary and ratings history on Monster Beverage click here. For more ratings news on Monster Beverage click here.
Shares of Monster Beverage closed at $53.77 yesterday.
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