Monster Beverage (MNST) is expected to deliver another "strong quarter" as resilient energy-drink demand, international growth and easing cost pressures support top- and bottom-line results, RBC Capital Markets said in an earnings preview.
The company is scheduled to report its Q2 results after the market closes on Thursday.
Tracked-channel sales rose about 9% during the June quarter, while the broader energy-drink category grew 11.7%. The investment firm said in a Tuesday note that Monster's US sales could modestly exceed tracked-channel trends, while international markets continue to provide broad-based momentum and improving market share.
The company is also benefiting from product innovation, zero-sugar growth and distribution expansion, with additional opportunities in food-service, on-premise accounts and vending channels. Recent moderation in gasoline prices and potential pricing actions could further support demand and profitability, according to the report.
Aluminum costs remain a margin headwind, though the outlook has improved as prices have eased from recent peaks. Monster also has multiple levers to offset those pressures, including pricing, supply-chain optimization, revenue growth management and product mix.
RBC expects revenue momentum and Monster's margin trajectory to remain on track but said the stock's strong performance and valuation near 10-year highs leave little room for a slip-up. Investor sentiment remains neutral, according to the report.
RBC has an outperform rating on Monster Beverage with a price target of $97.
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