Monster Beverage Is Citi's Favorite Stock In US Beverage Group

In a report published Tuesday, Citi analyst Wendy Nicholson maintained a Buy rating on

, with a target price of $155. Monster Beverage was added to Citi's US Focus List. "We are adding MNST to our U.S. Focus List as we believe there is considerable upside to the stock from current levels," analyst Wendy Nicolson mentioned. The company's share price has declined by 3 percent since May 8. This decline is despite the closing of

transaction on June 12. "We attribute this share price erosion at least in part to recent Nielsen data that shows while growth in the energy drink category remains strong, MNST's market shares have come under a bit of pressure (we believe owing to the distribution transitions that have taken place)," Nicolson added. Monster Beverage's share price is expected to be driven by stabilization of the US distribution transition, potential signing of new distribution agreements and improvement in international margins. The company is also poised to benefit from new product launches, potential stake increase by KO and big share repurchases. In the report Citi noted, "MNST has just received a $2.15 bn payment from KO which opens the door for a significant level of share repos (mostly to offset the dilution from issuing ~20% more shares such that KO owns 16.7% of the ~209 mm outstanding shares). We are forecasting roughly ~$1.5 bn in share repos for 2015, and another $1.0 bn in 2016." The company is expected to generate outsized growth in both sales and EBIT over the next five years, with CAGRs of 9 percent and 12 percent, respectively.