Monster Beverage Corp. (NASDAQ: MNST) has underperformed the market by 14 pts since announcing weak results on March 1. Deutsche Bank believes this to be an overly negative reaction and upgraded the stock to a Buy rating (from Hold). Today's upgrade has shares recovering 2.7%.

Analyst Steve Powers describes MNST's recent results as "clearly disappointing". However, acute inventory destocking at key distributors may help to explain Monster's 4Q miss. January net sales had reaccelerated to +27.9%. which implies a rough estimate of +10%-11% normalized underlying growth. This is in line with Deutsche Bank’s pre-quarter estimates.

Deutsche Bank also points out that over the last ten years, MNST has seen its earnings results lead to >-5% price declines on six occasions. In all cases, this resulted in compelling one-year returns (with the exception of 2Q12).

Deutsche Bank’s EPS estimates of $1.74 in FY18, and $1.97 in FY19 are below consensus ($1.78 in FY18 and $2.04 in FY19). These estimates are driven by slightly lower margin expectations. However, Powers notes that consensus has not fully settled out post-4Q results.