Corona, California-based Monster Beverage Corporation (MNST) is a marketer and distributor of energy drinks and alternative beverages in the U.S. and internationally. It offers energy drinks, iced tea, lemonade, juice cocktails, fruit beverages, and more. With a market cap of $53.6 billion, Monster Beverage operates through Monster Energy Drinks, Strategic Brands, Alcohol Brands, and other segments.
The beverage giant has significantly underperformed over the last year. Shares of Monster Beverage are down 11.5% over the past 52 weeks, while the S&P 500 Index ($SPX) has rallied 20.5%. In 2024 alone, MNST stock has dipped 10.7%, while the $SPX has gained 15.8% over the same time frame.
Zooming in further, MNST also lagged behind the Nasdaq Food & Beverage ETF’s (FTXG) marginal gains on a YTD basis and a 9.3% decline over the past 52 weeks.
The growing preference toward healthier alternatives and intense competition from new unlisted players has made investors jittery about Monster Beverage’s prospects. However, the company has maintained strong fundamentals and reported a solid quarterly growth of 11.8% in revenues and 11.2% in net income in the first quarter. The company announced its Q1 earnings results on May 2 and the stock jumped 3% on the following trading session.
For the current fiscal year, ending December, analysts expect Monster Beverage to report an EPS growth of 12.9% to $1.75 on a diluted basis. The company’s earnings surprise history is mixed. It beat or matched the consensus estimate in two of the past four quarters while missing the projections on two other occasions. In the last reported quarter, Monster missed the EPS estimates by 4.6%.
Despite the dip in share price, the consensus view on MNST is moderately bullish. Among the 21 analysts covering the stock, the consensus rating is a “Moderate Buy.” That’s based on 12 “Strong Buy” ratings, one “Moderate Buy,” six “Holds,” and two “Strong Sells.”
This configuration is slightly less bullish than two months ago when one analyst recommended a “Strong Sell.”
On Jul.23, Andrea Faria Teixeira from J.P. Morgan (JPM) maintained a “Hold” rating on Monster Beverage with a price target of $56. The rating is based on expectations of slower U.S. sales growth and international challenges in the second half of 2024, along with concerns about the spending power of low- to middle-income consumers affecting the energy drink market.
Despite Monster Beverage's strong historical growth and strategic share repurchases, the competitive and fragmented market and the current slow pace of the U.S. energy drinks category contribute to the cautious outlook.
The mean price target of $59.62 represents a premium of 15.9% to MNST’s current price levels. The Street-high target of $70 indicates the stock could rally as much as 36.1%.
On the date of publication, Aditya Sarawgi did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
