Monster Beverage Corporation MNST is poised to benefit from higher market penetration rates, according to a Monday note from Jefferies.
Monster Beverage is benefiting from higher penetration rates, with its recent innovation positioning it well to broaden its consumer base, Grundy said in a note, citing a survey by the firm. (See Grundy's track record here.)
Inflecting U.S. trends and compelling strategic potential render the risk-reward equation favorable, he said.
The analyst projects Monster will reach the higher end of 5-7 percent U.S. growth over the next three to five years, with strong near-term momentum likely driving a continuation of mid-single digit percentage growth in the U.S.
"While we see less upside since our 12/16 upgrade (+39 percent YTD vs. +16 percent S&P 500), mid-teens EPS growth at MNST's current multiple, coupled with strategic optionality (i.e., $85 bull case for KO acquisition), drives our Buy rating," Grundy said, giving his rationale for the top-notch rating.
Jefferies said its 2017-2019 estimates are ahead of consensus estimates.
The Price Action
Monster Beverage shares have added about 41 percent year-to-date.
At the time of writing, the shares of the company were rising 1.01 percent to $62.40.
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