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Why Monster Beverage Shares Jumped 6% Higher Today

By Anders Bylund - Updated Apr 15, 2019 at 3:20PM

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The energy drink veteran's shares have been punished for all the wrong reasons in recent months, according to a SunTrust analyst.

What happened

Shares of Monster Beverage (MNST 2.60%) 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.

So what

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 (KO 1.88%) are "overblown" in Chappell's eyes.

The finish line of a motocross race, featuring oversized Monster cans and many copies of the green-on-black clawmark logo.

Image source: Monster Energy.

Now what

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.

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Stocks Mentioned

Monster Beverage Corporation Stock Quote
Monster Beverage Corporation
MNST
$94.58 (2.60%) $2.40
The Coca-Cola Company Stock Quote
The Coca-Cola Company
KO
$63.04 (1.88%) $1.16

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