Market Overview

Wells Fargo: We Share Retailer's Concerns On Monster Beverage


Wells Fargo says its near-term outlook of Monster Beverage Corporation (NASDAQ: MNST) continues to deteriorate amid weak fourth quarter scanner data, Java production issues, poor rollout of Mutant and retailers' modest 5.3 percent growth outlook for the company in 2017.

“[W]ith growth trends for nearly all brand families continue to decelerate we have questions about whether MNST can return to double-digit top-line growth in the U.S. soon, if ever,” analyst Bonnie Herzog wrote in a note.

As such, the analyst expects weak fourth quarter results for the company, driven by decelerating energy category in the U.S. and consumer shift at the margin to healthier/hydration categories.

Herzog maintained his below consensus fourth quarter EPS estimate of $0.28 for Monster Beverage and lowered his FY 2017 EPS by S0.06 to $1.42 and valuation range by $5 to $44-$46.

The analyst, who has a Market Perform rating on the stock, also trimmed his fourth quarter U.S. volume growth estimate to 6 percent from 8 percent and global estimate to 10.5 percent from 13.4 percent.

In addition, contrary to media reports, Herzog sees a lower probability of The Coca-Cola Co (NYSE: KO) buying Monster in near-term.

“MNST is a strong consumer franchise with a tong runway of growth. We expect MNST to leverage its partnership with KO internationally and drive attractive earnings growth. However, we believe this is mostly priced into its valuation,” Herzog added.

At last check, shares of Monster Beverage fell 1.84 percent to $43.18.

Latest Ratings for MNST

Oct 2020Morgan StanleyMaintainsEqual-Weight
Aug 2020Morgan StanleyMaintainsEqual-Weight
Aug 2020Credit SuisseMaintainsOutperform

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Posted-In: Bonnie Herzog Wells FargoAnalyst Color News Reiteration Analyst Ratings

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