Credit Suisse: Coke To Prove Monster 'Benefits Of Scale'


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Monster Beverage's (NASDAQ: MNST) price target was boosted from $82 to $98 at Credit Suisse following the $2.15 billion investment from Coca-Cola (NYSE: KO).

“The transaction should bring several benefits, including stronger growth (particularly outside the US), faster margin expansion and greater management focus,” writes analyst Michael Steib.

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Credit Suisse assumes Monster will return most of the cash from Coca-Cola to shareholders, thus counteracting the share dilution. The note further states that the deal will boost EPS by 2016.

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International distribution is one of the biggest benefits Coca-Cola will provide, according to Steib.

“Damage issues and transportation costs should be greatly reduced and route-to-market strategies enhanced. The transfer of KO's brands provides benefits of scale: in a number of international geographies the transaction more than doubles the size of Monster's energy business.”

The note further states that Monster will benefit from Coca-Cola’s expertise in branding.

Shares of Monster were last trading at $92.45, six percent below Credit Suisse’s price target.


27% profit every 20 days?

This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.


Posted In: Analyst ColorPrice TargetAnalyst RatingsCredit SuisseMichael Steib