Market Overview

As Coke Shakes Up Energy Drink Category, Monster Earns A Downgrade

As Coke Shakes Up Energy Drink Category, Monster Earns A Downgrade

Monster Beverage Corp (NASDAQ: MNST) fizzled Thursday despite posting significant top- and bottom-line third-quarter beats. One analyst, acknowledging new risk in galvanized competition, backs the investors turning bearish on the Red Bull rival.

The Rating

Morgan Stanley analyst Dara Mohsenian downgraded Monster to Equal-Weight and cut his price target from $69 to $57.

The Thesis

Monster’s earnings were undermined by news of potential energy-drink competition from Coca-Cola Co (NYSE: KO).

The established brand is resisting Coke’s foray into the category, which it said violates an agreement prohibiting Coke from competing in energy drinks with products “likely to be confused with” Monster’s. However, Coke expects to be able to market under the Coca-Cola brand and leave Monster relatively untouched.

“After speaking with Coke, the company hopes the product will be more incremental to the category than cannibalistic to MNST,” Mohsenian wrote in a note. It delayed beta launch until April as it awaits arbitration.

The analyst considers the product a competitive threat compounding that of emerging rivals like Bang and ultimately limiting Monster’s strategic potential. Monster’s opposition to Coke’s launch, though, could prove equally painful.

“Monster distributes through the Coke distribution system globally in almost all markets,” he wrote. “Thus, any problems in the Coke relationship could impact results.”

Mohsenian expects Coke to roll out its line but noted that an arbitration loss is possible.

Price Action

At time of publication, Monster shares were down 6.6 percent to $52.21.

Related Links:

How Aluminum Prices Impact Monster Beverage's Gross Margins

Monster Beverage Is A 'Compelling Growth Story,' Deutsche Bank Says In Upgrade

Latest Ratings for MNST

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

View More Analyst Ratings for MNST
View the Latest Analyst Ratings


Related Articles (MNST)

View Comments and Join the Discussion!

Posted-In: Dara Mohsenian Morgan StanleyAnalyst Color Earnings News Downgrades Price Target Analyst Ratings Best of Benzinga

Latest Ratings

UBERRBC CapitalMaintains50.0
WIXJMP SecuritiesMaintains363.0
CVIJP MorganInitiates Coverage On22.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at