Following the revelation of weaker-than-anticipated fourth-quarter financial results, shares of Monster stock (MNST:NSD) plummeted roughly 4% in pre-market trade. The company’s fourth-quarter net sales of $1.51 billion climbed 6.2% year-over-year but fell short of analysts’ expectations of $1.60 billion. Similarly, earnings of $0.57 per share fell short of expectations of $0.63 per share. The management of MNST attributed the YoY fall in earnings to higher ingredient and input costs, as well as increased co-packing fees.
To mitigate the unfavorable impact of cost headwinds, the organization has implemented price adjustments. Yet, rising co-packing fees and a limited sugar supply may reduce its profit margins. Mark Astrachan, an analyst at Stifel Nicolaus, is positive about future prospects of Monster stock and advises investors to purchase the company on a post-earnings dip.
Astrachan anticipates that MNST’s sales growth rate would accelerate in 2023, but Dara Mohsenian, an analyst at Morgan Stanley, is optimistic about the company’s innovation pipeline, the expansion of healthier goods, and the recovery of gross margins.
In addition to the financial results for the fourth quarter, MNST announced a 2-for-1 stock split. Under the terms of the plan, shareholders of record as of March 13 will be eligible to receive one additional share, and on March 28 the Monster stock will begin trading on a split-adjusted basis.
While the average price objective of analysts for MNST stock is $109.47, showing an upside potential of 11.4% over the next 12 months, the stock has gotten a consensus rating of Strong Buy.
Company Profile:
Monster Beverage Corporation, through its subsidiaries, engages in development, marketing, sale, and distribution of energy drink beverages and concentrates in the United States and internationally. The company operates through three segments: Monster Energy Drinks, Strategic Brands, and Other.
The company sells its products to bottlers, full-service beverage distributors, as well as sells directly to retail grocery and speciality chains, wholesalers, club stores, mass merchandisers, convenience chains, drug stores, foodservice customers, value stores, e-commerce retailers, and the military; and concentrates and/or beverage bases to authorized bottling and canning operations.
The company was formerly known as Hansen Natural Corporation and changed its name to Monster Beverage Corporation in January 2012. Monster Beverage Corporation was founded in 1985 and is headquartered in Corona, California.
