Analysis - Should Monster Beverage Corp be wary of bright future?
Monster is expanding share in international markets
It was a tough 2013 for Monster Beverage Corp as a year of court and regulatory battles saw net profits dip in November's year-to-date results.
Sales, however, continued to stay strong, and, according to an analysts note, look set to remain so for the coming year. Perhaps 2014 will deliver an easier ride for the California-based energy drinks maker?
Stifel analyst Mark Astrachan said today (7 January) that his firm is raising its 12-month target on Monster's share price on the back of improving US sales and continued strong growth in international markets. The energy drinks group has a “substantial runway for international growth”, according to Astrachan, as it currently only has one-tenth of rival Red Bull's market share outside of the US.
That international market share is already increasing, Astrachan notes. Year-on-year market share growth in Germany stands at 5%, while Spain's is up 124%, the analyst said, citing the most recent figures available. Monster products in the UK, meanwhile, have posted a 30% year-on-year market share growth. In South Africa it was a 73% jump.
The positive outlook, however, could be a double-edged sword for Monster.
A strong lift in sales this year will go some way to improving moods at the corporation, which last year was beset by problems including a legal wrangle with San Francisco's attorney general, Dennis Herrera, and further US Food and Drug Administration investigations into the safety of caffeine in food products.
But it could also make Monster more attractive to larger beverage firms, such as the Coca-Cola Co, which was rumoured in the past to be keen to make a swoop for the energy drinks producer. Today, another Stifel report said that Anheuser-Busch InBev could be interested in adding Monster to its portfolio.
If that was to happen, then analysts would be advised to set their Monster share price targets that few notches higher.
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