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Monster Beverage Is 'Best In Class,' Remains A Top Pick At Credit Suisse

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Monster Beverage Is 'Best In Class,' Remains A Top Pick At Credit Suisse

Monster Beverage Corporation (NASDAQ: MNST) continues to be a beast in the stock market, remaining Credit Suisse analyst Laurent Grandet’s top pick in the soft drink sector.

Grandent reiterated an Outperform rating and nudged its price target up from $59 to $60.

The analyst was impressed by the company at its annual shareholder meeting on Monday, seeing upsides for innovation and international launches.

“We continue to expect that FY17 will be a year of sales growth reacceleration,” Grandet said in a note.

Growth Drivers

The analyst expects to see marginal share gains in the United States from the return of Java Monster and non-core energy drinks such as Mutant and Hydro.

Monster should also see sales growth from an increased presence in the on-premise channel and expansion overseas.

The result could be an EBIT margin expansion of 160 basis points by fiscal 2019. This takes into account high reinvestment in legacy brands from The Coca-Cola Co (NYSE: KO), which entered a strategic partnership with Monster in 2015.

Grandet also expects to see greater involvement from Coke in the future, as it pursues its “total beverage company” approach, potentially even leading to an acquisition.

M&A rumors will likely be held back for a couple years though. Coke has an 18 percent stake in Monster and will need to increase that to 20 percent by June next year to keep its two seats on the board.

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Latest Ratings for MNST

DateFirmActionFromTo
Aug 2020Morgan StanleyMaintainsEqual-Weight
Aug 2020Credit SuisseMaintainsOutperform
Aug 2020Deutsche BankMaintainsBuy

View More Analyst Ratings for MNST
View the Latest Analyst Ratings

 

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