By Angela Palumbo
Monster Beverage stock was falling Thursday after two analysts cut their ratings on the energy- drink company.
Truist Securities analyst Bill Chappell double downgraded shares of Monster to Sell from Buy and cut his price target on the stock to $46 from $65. Chappell wrote in a research note that "while we still view Monster as a great company, we no longer see it as a high growth story."
Monster stock has seen spectacular gains over the past few decades. It it is the second-best performer in the stock market over the last 25 years, ranking just behind Nvidia, according to Dow Jones Market Data. Monster was also a Barron's stock pick in August 2023.
Chappell said that as more companies release competitive drinks, "we believe Monster's reach of the U.S. energy category has reached its limits."
Monster stock currently trades at 28.8 times the earnings expected for the coming 12 months. Chappell said that the average provider of nonalcoholic drinks trades at around 19.7 times.
"We see no reason why the stock should continue to hold a super premium multiple to its multinational beverage peers," the analyst wrote.
J.P. Morgan analyst Andrea Teixeira also downgraded shares of Monster. Her rating went to Neutral from Overweight, while she cut her price target to $59 from $66.
"We see limited catalysts to the upside at this point as long-hoped for potential price increases (key part of bull case) somehow lost their attractiveness due to the latest run up in aluminum prices and an already-stretched lower income consumer," Teixeira wrote.
Monster didn't immediately respond to a request for comment. Shares were down 4.3% to $52 and were on pace to have their largest percentage decrease since Aug. 4, 2023, according to Dow Jones Market Data. The stock has fallen 10% this year.
Write to Angela Palumbo at angela.palumbo@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
April 25, 2024 11:32 ET (15:32 GMT)
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