Monster Rallies as Analysts Applaud Strong First-Quarter Sales

(Bloomberg) -- Monster Beverage Corp. was among the best performers in the S&P 500 Index Friday, surging as much as 10 percent after the company’s first-quarter net sales surpassed the highest Wall Street estimates.

“Although many of the controversies that have fueled the heated ‘bull vs. bear’ debate on MNST over the past 6 months admittedly remain unsettled, we see the bulls having received what they wanted,” Deutsche Bank analyst Steve Powers said in a note to clients.

Padding the bull case further was especially strong April sales growth, which sets the company up for continued momentum into the second quarter, he wrote. Powers boosted his price target to $73 from $71 and kept a buy rating on the stock.

Such solid sales growth was particularly impressive given increased competition in the U.S., according to Citi analyst Wendy Nicholson. She said better-than-expected EPS results were also supported by a lower-than-expected tax rate, which the energy-drink company noted was due to an increase in the deductions for equity compensation, as well as a favorable geographic mix.

Bloomberg Intelligence senior food and beverage analyst Kenneth Shea expects Monster’s sales to keep rising, likely at a low-teens rate in 2019. Sales are being driven by expanding penetration of international markets through "the vast Coca-Cola system."

Monster has risen nearly 20 percent since a mid-December low, though analysts are mixed on the stock. Bloomberg data shows 10 recommendations to buy, 9 hold ratings and one sell-equivalent. The average analyst price target is $67, implying 6 percent in potential return, according to Bloomberg data.

To contact the reporter on this story: Sydney Maki in New York at smaki8@bloomberg.net

To contact the editors responsible for this story: Brad Olesen at bolesen3@bloomberg.net, Steven Fromm, Will Daley

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