Shares of Monster Beverage (NASDAQ:MNST) are down about 4% in today’s pre-market session. The company that develops and markets energy drinks reported lower-than-expected Q4 financials. Moreover, it announced to split its stock.
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MNST’s net sales of $1.51 billion increased 6.2% year-over-year in Q4 but came below the Street’s estimate of $1.60 billion. At the same time, its earnings of $0.57 a share decreased 4.9% and fell short of the analysts’ forecast of $0.63.
Management blamed higher ingredient and other input costs for the year-over decline in the bottom line. In addition, increased co-packing fees remained a drag.
Besides for the quarterly financials, MNST announced a 2-for-1 split of its common stock. Shareholders of record as on March 13 will be eligible to receive one additional share under the plan. Moreover, the MNST stock will start trading on a split-adjusted basis on March 28.
While MNST’s Q4 financials disappointed, Stifel Nicolaus analyst Mark Astrachan recommended buying the stock on post-earnings weakness. Astrachan expects MNST’s sales growth rate to accelerate in 2023. Moreover, Dara Mohsenian of Morgan Stanley is also bullish about MNST. The analyst expects the company to benefit from the innovation pipeline, expansion of healthier products, and recovery in gross margins.
Investors should note that the company has taken pricing action to counter the negative impact of cost headwinds. While higher pricing will likely offset most of the cost headwinds, increased co-packing fees and tight sugar supply could hurt its margins.
What is MNST’s Price Prediction?
Analysts’ average price target of $113.36 implies 11.4% upside potential in MNST stock over the next 12 months. While the upside in MNST stock appears limited, it has received nine Buy and two 18 Hold recommendations from analysts, translating into a Strong Buy consensus rating.
