2023-08-07 11:01:45 ET
Monster Beverage Corporation ( NASDAQ: MNST ) rose 2% after Piper Sandler upgraded shares.
The firm bumped the beverage maker to Overweight from Neutral and increased the price target to $63 from $60.
“When we initiated coverage roughly two months ago, valuation was our only real hesitation, and we now consider the risk/reward to be more attractive,” Piper Sandler said in a note. “Its 2Q23 results were below expectations, but there is nothing concerning about the business or its near and long-term momentum.”
Piper Sandlery remains “bullish on the energy drink category specifically” and expects MNST to continue to be well-positioned.
MNST has a strong innovation pipeline in energy drinks and alcohol. The firm raised its 2023 estimated EPS to $1.51 to $1.60 compared to the consensus of $1.53.
Last week, Monster Beverage ( MNST ) reported second-quarter revenue of $1.85B that missed the average analyst estimate by $20M. Net changes in foreign currency exchange rates had an unfavorable impact on net sales.
The beverage company said it has increased prices internationally with additional price increases planned in a number of other markets during the remainder of the year.
“MNST has strong brand equity, a robust innovation pipeline and is active in M&A,” Piper Sandler said.
Gross margins should improve as inflation eases and pricing holds.
“If margins improve more quickly than we model, there may be more upside to the stock than we expect, though we recognize that one risk is relatively little transparency or guidance from management,” Piper Sandler said.
The stock has 11 Strong Buy ratings from Wall Street analysts, four Buys, eight Holds and one Sell.
MNST is up 10% this year so far.
More on car stocks:
- Monster Beverage falls as foreign exchange rates hurt earnings
- Monster Beverage GAAP EPS of $0.39 in-line, revenue of $1.85B misses by $20M
- Monster Beverage: Solid Attributes But A Pricey Valuation
- Monster Beverage Corporation ( MNST ) Q2 2023 Earnings Call Transcript
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Monster Beverage rises as Piper Sandler upgrades