Monster Beverage is Morgan Stanley's favorite beverage stock into the earnings season
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Monster Beverage Corporation (NASDAQ:MNST) is named the top stock pick in the beverage sector by Morgan Stanley
Analyst Dara Mohsenian and team see robust category growth with favorable long-term demographic trends for the U.S. category for MNST with recent healthier products, as well as strong international market share trends.
Confirming its expectation for strong secular revenue growth, Morgan Stanley pointed to 15% underlying three-year revenue CAGR for MNST in the four-month period that ended in July.
"We also see a beneficial impact on revenue/margins from September US price increases that should help rebuild artificially supply chain depressed margins and so far have resulted in very little demand elasticity. These factors should drive ~12% LT topline growth, above the HSD level the market is pricing into valuation, and pricing/aggressive share repurchases should help drive 30+% EPS growth in FY23, after a 10% aggregate EPS decline in FY21/22e."
Morgan Stanley has an Overweight rating locked in on Monster Beverage (MNST) and price target of $109. The 52-week high for shares is $99.51.
Monster Beverage (MNST) is not due to report earnings until the first week of November. The company has recorded four straight revenue beats, but has slightly missed consensus EPS estimates with its last two reports.