Monster Pops After Stifel Nicolaus Upgrade
Shares of Monster Beverage (NASDAQ: MNST) traded up over four percent on Tuesday after analysts at Stifel Nicolaus upgraded the stock from a Hold to a Buy with a $65 price target.
Monster has been a hot stock for traders in 2012. Split adjusted (the company split its shares 2-for-1 in February), it opened the year around $45. Shares then proceed to rally virtually straight upward, before peaking in late spring.
At that point, it was rumored that Coca-Cola (NYSE: KO) was in the process of acquiring Monster. Coke denied the rumors, leading to a reversal in Monster's shares.
Then the situation at the company deteriorated further, when various media outlets reported that the FDA was investigating deaths linked to consumption of Monster's energy drink. Reportedly, as many as half a dozen people had died of heart complications hours after consuming Monster's energy drink. With possibly regulatory overhang, many traders dismissed the notion that the company would ever be acquired, and shares rapidly plummeted.
In recent weeks, however, shares have slowly been drifting back upward, and Stifel's note on Tuesday only further supported this move.
Analysts stated that they believe “regulatory concerns are overstated.” They note that, despite selling some eight billion cans of Monster Energy, the drink has only been linked to 35 FDA “incident reports.”
Further still, Stifel's analysts are skeptical of the importance of incidence reports, noting that these reports can be filed by anyone, do not need to be verified, and provide no context of consumption or medical history.
Still, Stifel makes no mention of the potential of an acquisition, instead preferring to argue Monster's compelling valuation on the company's high growth prospects.
Shares of Monster traded near $55 on Tuesday, up over four percent.
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