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US: Hansen Natural's Monster demand to continue - analysts

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Demand for Hansen Natural's Monster Energy beverages remains robust, with sales growth for the next two to three years expected in the high single- to low double-digits, according to analysts.

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In a research note today (11 April), Stifel Nicolaus analysts said growth should be driven by "favourable US category trends and sustained share gains for Monster, international expansion, and innovation". The analysts lifted their sales and profits growth estimates, but warned of a possible short-term hit from rising costs.

"We update our estimates and now anticipate 2011 EPS of US$2.73 (was $2.76) for higher input costs," the analysts noted. "We lift our 2012 EPS estimate to $3.18 (was $3.15) for stronger sales growth.

"Nearer-term, we estimate 1Q11 EPS of $0.53, approximately 10% above Street consensus, due to continued strong sales growth (we estimate 37.5% y/y sales growth), partly a result of favourable comparisons."

The analysts said they estimate heightened input costs, particularly aluminium, but added that they are "manageable and largely offset by anticipated SG&A expense leverage".

Hansen Natural announced its quarterly and full-year results in February. The firm said that continued strong demand for energy drinks boosted profits in 2010, adding that it had no plans to increase pricing in its energy drinks portfolio, despite pressure from rising commodity costs.


Sectors: Soft drinks, Water

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