Monster Beverage (MNST) could post another strong quarter, helped by solid US demand and faster international growth, but tougher comparisons, fewer new products in H2 and a high valuation could make further share gains harder, UBS said in a note emailed Friday.
UBS expects Q2 organic sales to rise 15.1%, above the Visible Alpha consensus, with international growth of about 25% helping offset slower US growth of about 10%, while early Q3 sales trends are expected to remain strong, supported by international markets, and Q3 sales growth of 11.7%.
Europe should remain a key growth area as recent retail data points to growth in the high-teens to low-20% range, UBS said.
Looking beyond Q2, UBS said Monster will need to maintain strong sales growth as comparisons become harder, and the company plans less product innovation in H2.
UBS maintained a neutral rating for Monster Beverage with a $104 price target, saying that the stock already reflects high expectations, which means Monster may need stronger earnings estimates or a lower share price to offer more upside.
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