Why Monster Beverage Corp. Shares Sparkled On Friday

The energy drink company's shares soared thanks to good tidings from the annual shareholder meeting.

Anders Bylund
Anders Bylund
Jun 8, 2018 at 3:00PM
Consumer Goods

What happened

Shares of energy drink producer Monster Beverage (NASDAQ:MNST) jumped as much as 6.3% in Friday's trading, before settling down to a milder 4.8% gain at 2:40 p.m. EDT. Several analyst firms walked away from Monster's annual shareholder meeting with the impression that it probably will raise unit prices by the end of the year.

So what

In a research note published early Friday morning, analyst firm Stifel Nicolaus noted that Monster's sales growth should continue tracking near 10% throughout 2018, while gross margins are expanding. Goldman Sachs agreed, with a focus on CEO Rodney Sacks saying that Monster is "highly likely" to battle rising ingredient costs by raising prices later this year.

A can of Monster Energy on a bed of ice cubes and colorful plastic cooling gems.

Image source: The author.

Now what

Going beyond the simple pricing prospects, Monster is expanding its energy drink sales around the world in a tight partnership with distribution wizard Coca-Cola (NYSE:KO). During the shareholder meeting, Sacks highlighted newly opened or expanded markets in places like Ecuador, Israel, and Eastern Europe. Pairing that long-term growth driver with solid pricing power, Monster Beverage looks ready to keep the good times rolling for at least several more years.

That being said, Monster shares are still trading 20% below their yearly highs due to a soft showing in February's fourth-quarter report. It's not surprising to see investors pouncing on this stock at any glimpse of good news.