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Monster Beverage Stock Falls as Goldman Sachs Lowers Its Rating

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Stock falls on rating downgrade

Monster Beverage (MNST) stock was down 1.6% as of 2:47 PM EDT on March 20 as Goldman Sachs downgraded its rating for the energy drink maker to a “hold” from a “buy.” Goldman Sachs’ rating downgrade reflected its concerns that weak sales in the US market could affect the strength in Monster Beverage’s international performance. Goldman lowered its price target for Monster Beverage stock to $59 from $67.

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On March 19, MNST fell 4.4% after Wells Fargo cautioned investors about the company’s sales amid growing competition from emerging players such as VPX Sports’ Bang energy drinks. On March 12, BMO Capital downgraded Monster Beverage from an “outperform” to a “market perform” but retained its price target of $62.

On March 7, Credit Suisse initiated coverage of Monster Beverage stock with an “outperform” rating and a price target of $78.

Current recommendations

Monster Beverage is currently rated as a “buy” by 11 out of 19 analysts. Seven analysts have given it “hold” recommendations, and one has given it a “sell” recommendation. The average 12-month price target for Monster Beverage is ~$67.31. MNST had risen 17.7% year-to-date as of March 19.

Monster Beverage has been generating better sales growth than its larger peers the Coca-Cola Company (KO) and PepsiCo (PEP). In 2018, Monster Beverage’s net sales grew 13.0% compared to the 10% fall in Coca-Cola’s revenue (due to the impact of refranchising) and the 1.8% rise in PepsiCo’s revenue. However, the company’s margins have been under pressure due to several factors, including rising input and freight costs. We’ll discuss Monster Beverage’s sales and earnings expectations in the next article.

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