Shares of Monster Beverage (NASDAQ:MNST) traded 6% higher at 9:50 a.m. on Tuesday. The energy drink giant enjoyed an upgrade and bullish analysis from an analyst firm today.
William Chappell at the SunTrust Robinson Humphrey firm upgraded Monster from "hold" to "buy" today, raising his price target from $50 to $65 per share. The analyst cited lower ingredient prices and a successful repricing project in the U.S. market. Recent worries about limited growth in China and friction in the distribution partnership with Coca-Cola (NYSE:KO) are "overblown" in Chappell's eyes.
As of Monday's market close, Monster's shares had traded 22% lower in 52 weeks and 15% lower in the last six months. The SunTrust analyst sees an attractive value in Monster at these prices, especially since the reasons for the stock's recent downtrend seem flimsy at best.
The stock does still trade at a relatively generous 28 times trailing earnings and 28 times free cash flows but can back it up with solid earnings growth and huge potential for international growth over the next few years. So I find myself nodding along with Mr. Chappell's bullish analysis here.
Check out the latest Monster Beverage earnings call transcript.