Morgan Stanley Remains Confident in Monster Beverage Corp. Following Solid Underlying Results

In a report published Friday, Morgan Stanley analyst Dara Mohsenian reiterated an Overweight rating and $78.00 price target on

. In the report, Morgan Stanley noted, “MNST Q4 adj. EPS of $0.44 was below cons. ($0.46) and MS ($0.47), however the underlying quality was strong with a +3.2% operating profit beat (or +7.8% beat ex inventory write-offs). Q4 sales were robust, coming in +2.2% above consensus and +0.8% vs. MS (although a $3M load-in in France flattered sales by 60 bps), with gross sales accelerating sequentially in both the US (+12.4%) and International (+19.7%). Gross margins were weak, with results -164 bps below consensus (although impacted by a $6M headwind or 110 bps from inventory damages and reserves), but was more than offset by -188 bps of lower than expected operating expenses (with selling & distribution expense 170 bps below MS est.), driving a 3.2% profit beat. Below the line items detracted 5 cents from EPS, with 4 cents from a higher tax rate. We are raising our FY14 EPS by ~1.5% following Q4 results.” Monster Beverage Corp. closed on Thursday at $71.16