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Monster Beverage maintains stock target, Overweight rating amid pricing strategy

EditorNatashya Angelica
Published 2024-06-14, 11:04 a/m

On Friday, Piper Sandler maintained its Overweight rating on Monster Beverage (NASDAQ:MNST) with a stock price target of $59.00. The firm highlighted that Monster Beverage is implementing a 5% price increase on its Monster branded products starting November 1st, marking its first price hike in approximately two years. Alongside this increase, the company plans to boost promotional discounting on its Bang and Reign brands.

Monster Beverage's U.S. measured retail sales showed a slight decline of 0.3% during the seven weeks that align closely with the second quarter of 2024 to date. This downturn has reportedly intensified in the most recent weeks. Despite these trends, Piper Sandler is holding steady on its earnings per share estimates for Monster Beverage, projecting $1.81 for 2024 and $2.07 for 2025.

The firm's analyst commented on the company's pricing strategy and sales performance, noting the potential impact on the brand's value. "Elasticities (on all three brands) remain a wild card," the analyst stated. They also observed that sales declines for Bang are beginning to level off as a marketing campaign gains traction.

Piper Sandler's price target remains unchanged as it continues to watch sales trends closely. The firm acknowledges that persistent or worsening declines in U.S. sales could indicate a greater downside risk to Monster Beverage's market multiple.

In other recent news, Monster Beverage Corporation (NASDAQ:MNST) reported record net sales of $1.9 billion in the first quarter of 2024, a significant 11.8% increase from the previous year. The company also announced the completion of a hefty $3 billion share buyback, repurchasing approximately 5.4% of its outstanding common stock. In another development, the company is preparing for a leadership transition in 2025 with Co-CEOs Rodney Sacks and Hilton Schlosberg.

RBC (TSX:RY) Capital and Goldman Sachs (NYSE:GS) maintained positive stances on Monster Beverage, reiterating their confidence in the company's growth opportunities. Still, Deutsche Bank (ETR:DBKGn), Jefferies, and Roth/MKM reduced their price targets due to concerns about a slowdown in the company's core US energy drink sales and higher anticipated costs. BMO (TSX:BMO) Capital Markets also lowered its price target due to similar concerns.

The recent appointment of Rob Gehring as Chief Growth Officer was highlighted as an optimistic development for Monster Beverage. Despite challenges, firms generally maintain confidence in Monster Beverage's growth trajectory, especially given the company's robust international market presence and expansion efforts. These are some of the recent developments for Monster Beverage Corporation.

InvestingPro Insights

As Monster Beverage (NASDAQ:MNST) navigates the market with its new pricing strategy, InvestingPro data provides a deeper look into the company's financial health and stock performance. With a market capitalization of around $50.75 billion and a P/E ratio of 30.2, the company showcases a steady valuation in the market. Notably, Monster Beverage has demonstrated a robust revenue growth of 13.08% over the last twelve months as of Q1 2024, reflecting its ability to expand despite broader market challenges.

InvestingPro Tips suggest that Monster Beverage holds more cash than debt, which is a reassuring sign of financial stability. Moreover, the RSI indicates that the stock is in oversold territory, presenting a potential opportunity for investors considering the company's solid fundamentals, such as its gross profit margin of 53.45% over the same period.

For readers looking to delve further into Monster Beverage's prospects, InvestingPro offers an additional 14 tips that could guide investment decisions. To access these insights and make the most of your financial analysis, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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