On Friday, Piper Sandler adjusted its price target on shares of Monster Beverage (NASDAQ:MNST), increasing it to $59.00 from the previous $58.00, while keeping a Neutral rating on the stock. The adjustment comes in the wake of Monster Beverage's first-quarter 2024 earnings report, which met consensus estimates for both earnings per share (EPS) and revenue.
The company also announced an upcoming $3.0 billion 'Dutch Auction' share repurchase plan, which is expected to enhance its 2025 earnings per share by $0.07 to $0.08, net of interest expense. Additionally, Monster Beverage has revealed intentions to adjust pricing for its Monster brand in the United States in the fourth quarter of 2024, although the extent of the price change has not been disclosed.
Despite the positive news of the share buyback and pricing strategy, Monster Beverage has seen a deceleration in sales growth at the beginning of the second quarter of 2024. Shipments in April 2024 grew by approximately 10% compared to April 2023, a figure that includes the benefit of two additional shipping days. Furthermore, the company's market share growth in the U.S. has slowed, although it anticipates a boost from ongoing shelf resets that are slated to conclude in the second quarter of 2024.
Piper Sandler has updated its forecasts to account for the new share buyback tender, the planned U.S. pricing adjustments, the observed slowdown in volume growth momentum, and larger-than-anticipated losses in the alcohol segment. Consequently, the firm has slightly reduced its EPS estimate for 2024 from $1.84 to $1.83 but has increased its 2025 EPS projection from $2.07 to $2.11.
The new price target of $59 reflects approximately 28 times the expected 2025 earnings per share, indicating a modestly optimistic outlook on the future performance of Monster Beverage's stock.
InvestingPro Insights
As Monster Beverage (NASDAQ:MNST) navigates through its current financial landscape, key metrics from InvestingPro provide a snapshot of the company's valuation and performance. With a market capitalization of $56.32 billion, Monster Beverage trades at a P/E ratio of 33.79, which adjusts slightly to 32.98 when considering the last twelve months as of Q1 2024. The company's growth prospects are reflected in a PEG ratio of 0.91 for the same period, suggesting a balance between its price tag and expected earnings growth.
Two InvestingPro Tips that stand out for Monster Beverage are that the company holds more cash than debt on its balance sheet, indicating a strong financial position, and that it is trading at a high earnings multiple, which may attract investors looking for growth potential. Notably, analysts have revised their earnings downwards for the upcoming period, which could be a point of consideration for investors.
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