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Wells Fargo Downgrades Monster Beverage to ‘Market Perform’



Price movement

Monster Beverage (MNST) has a market cap of $31.7 billion. It fell by 3.8% to close at $155.54 per share on July 18, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were -3.4%, -0.18%, and 4.4%, respectively, on the same day. MNST is trading 2.1% below its 20-day moving average, 0.89% above its 50-day moving average, and 9.4% above its 200-day moving average.

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Related ETF and peers

The Guggenheim S&P Equal Weight Consumer Staples ETF (RHS) invests 2.5% of its holdings in Monster Beverage. The ETF tracks an equal-weighted index of large-cap US consumer staples stocks drawn from the S&P 500. The YTD price movement of RHS was 11.7% on July 18.

The market caps of Monster Beverage’s competitors are as follows:

  • PepsiCo (PEP): $157.6 billion
  • The Coca-Cola Company (KO): $197.7 billion
  • Dr Pepper Snapple Group (DPS): $17.9 billion

Monster Beverage’s rating

Wells Fargo has downgraded Monster Beverage’s rating to “market perform” from “outperform.” TheStreet Ratings rated the stock as a “buy” with a score of A-.

Performance in fiscal 1Q16

Monster Beverage reported 1Q16 net sales of $680.2 million, a rise of 8.5% compared to net sales of $626.8 million in 1Q15. The company’s cost of sales as a percentage of net sales fell by 7.3% in 1Q16. It reported operating income of $254.7 million in 1Q16 compared to $7.6 million in 1Q15.

Its net income and EPS (earnings per share) rose to $163.9 million and $0.79, respectively, in 1Q16 compared to $4.4 million and $0.03, respectively, in 1Q15.

Monster Beverage’s cash and cash equivalents and inventories rose by 16.2% and 6.3%, respectively, in 1Q16 compared to 4Q15. Its current ratio rose to 7.01x in 1Q16 compared to 6.96x in 4Q15.

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