Can Monster Beverage Investors Expect Strong Q4 Results?



Stock movement before Q4 results

Monster Beverage (MNST) is expected to announce its fourth-quarter results after the financial markets close on February 27. As of February 22, Monster Beverage stock has risen 18.7% on a YTD basis. In comparison, the stock of larger PepsiCo (PEP) has moved up by 5.7%, while Coca-Cola (KO) has declined 4.4% since the beginning of 2019.

Monster Beverage exceeded analysts’ sales as well as earnings expectations for the third quarter. However, Monster Beverage stock declined 3.2% on November 8 after the announcement of the third quarter results on the previous day, as investors were disappointed with the company’s declining margins. Also, Monster Beverage disclosed a disagreement with Coca-Cola regarding the introduction of two energy beverages developed by Coca-Cola.

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Analysts’ ratings and price target

On December 13, UBS initiated coverage of Monster Beverage stock with a “sell” recommendation and a price target of $48. Concerns over an expected slowdown in Monster Beverage’s sales growth rate, a higher valuation, and lower margins led to UBS issuing a “sell” rating.

On January 8, Suntrust Robinson raised its rating for Monster Beverage stock to “buy” from “hold” and increased its price target to $65 from $50. The rating upgrade was backed by the belief that margins will improve due to the price hike in the domestic market and a decline in certain input costs like that of sugar.

On January 9, Goldman Sachs lowered its price target to $63 from $66. As of February 22, the average 12-month price target for Monster Beverage stock was $62.44, which implies a further upside of about 7%.

As of February 22, Monster Beverage stock was rated a “buy” by 12 analysts, a “hold” by five analysts, and a “sell” by one analyst.

In the next part of this series, we’ll discuss analysts’ expectations from the company’s fourth-quarter and full-year sales.


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