Analysts lift Monster Beverage price targets following investor meeting

Monster Beverage (NASDAQ:) shares are down premarket Wednesday, but analysts at Goldman Sachs and BMO Capital remain positive on the stock following its latest investor meeting.

The company’s shares are down around 1.2% premarket after it hosted a business update with co-CEOs Rodney Sacks and Hilton Schlosberg on Tuesday.

BMO Capital, which has a Market Perform rating on the stock, increased the MNST price target to $58 in a note following the event.

Analysts said Monster’s commentary was largely positive in terms of its 2024 outlook. However, they noted that “4Q23 may be messy as MNST appeared to talk down quarterly gross margins (temporary inefficiencies) and expects an impairment charge.”

“Notwithstanding potential 4Q dynamics, our view remains unchanged as MNST is positioned for another strong year in 2024 with pricing an incremental lever, but we would be opportunistic at a more attractive entry point with shares currently trading at 32x our 2024 EPS,” analysts added.

Meanwhile, Goldman Sachs raised the firm’s price target for MNST to $68 from $62 per share, maintaining a Buy rating.

Analysts came away from the event “incrementally positive on the set-up for the stock this year and beyond given a number of growth drivers, including a robust innovation pipeline.”

“While mgmt didn’t announce a price increase in the U.S. (which we thought was a possibility), mgmt noted they are continuing to evaluate the market for additional pricing opportunities,” analysts at Goldman Sachs added.

The investment bank also sees room for more meaningful gross margin expansion this year as cost pressures continue to moderate, Bang is margin accretive, MNST transitions the production of some of its Monster energy drink volume in-house, and management takes a potential price increase in the U.S. They estimate gross margin will expand 225bps to 55.3% in 2024.