3 Analysts Updates On Monster Beverage After Coca-Cola Stake
Below are the updated rating and price targets with analyst comments.
Citigroup: Neutral, $93 target price
"We have a Neutral rating on shares of Monster Beverage. We believe in MNST as a long-term growth story given a combination of factors, including (i) its consistently improving market share trends; (ii) the distribution expansion opportunities that exist for MNST outside the U.S.; (iii) the company's solid cash flow generation, which should enable it to fund further share repurchases, thereby boosting EPS; and (iv) the potential for MNST to be acquired by a larger player. However, we feel that the stock's current valuation appears full, as investors are already discounting much of MNST's future growth potential."
Jefferies: Hold, $95 target price
"We downgrade MNST to Hold following the KO announcement, for the following three reasons: (i) strategic potential is now less of a catalyst; (ii)
valuation looks full at 16.5x CY15E EV/EBITDA; and (iii) the bar is now higher for the stock and global industry slowing remains a key risk factor. We still view the alliance with KO as a win-win, but see significantly less stock upside over the next 12 months. Adj. FY15-16E EPS to reflect deal, PT goes to $95."
Credit Suisse: Outperform, $98 price target
"MNST management provided more detail regarding the strategic partnership with KO. The transaction should bring several benefits, including stronger growth (particularly outside the US), faster margin expansion and greater management focus. We are raising our target price to $98 from $82. For now,we assume that MNST return most of the cash received to shareholders over the course of FY15 and FY16 which would offset the dilution from the newly issued stock in FY15 and would be EPS accretive by $0.12 in FY16. Once MNST provide more clarity about the timing and magnitude of the suggested cash returns, we will update our model accordingly. "
Shares of Monster closed lower by 5.40 percent at 88.44.
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