3 Expectations For Monster Beverage

Monster Beverage Corporation MNST is scheduled to host its annual shareholder meeting on June 14 in California. Goldman Sachs’ Judy E. Hong maintained a Buy rating for the company, with a price target of $173. The analyst commented that the focus is likely to be on innovation and the company’s International performance.

Analyst Judy Hong expects Monster Beverage’s US growth to continue to be healthy, with potential for upside from innovation, while International sales growth is likely to accelerate. The company’s margins would expand as International gains scale and costs decline. Monster Beverage is on Goldman Sachs’ Americas Conviction Buy List.

Expectations From Shareholder Meeting

Hong expects a constructive tone at the meeting. She mentioned three expectations:

• US energy drink category: The energy drink category’s growth is tracking at 3.8 percent so far in 2Q, versus the 6.4 percent recorded in 1Q. “Poor weather plus lapping Red Bull’s pricing and new products last year appear to be driving most of the softness,” the analyst wrote. Although Monster Beverage’s growth has decelerated to 6.6 percent in the last 12 months, the company is gaining share and core Monster energy brands are delivering high-single-digit growth.
• US innovation: “We expect additional color around upcoming innovation including Mutant M, M Hydro, and Monster E2O, all of which have seen movements in filings with the US Patent and Trademark office,” Hong stated. These products are expected to expand into new occasions and categories, such as refreshment and hydration.
• International growth: Management is likely to indicate continued progress in transitioning distribution to the KO system and update on China. “We see potential for sales improvement in recently-transitioned markets such as Germany, Australia/New Zealand, Turkey and Russia, while China launch may be a bit delayed,” Hong added.