Monster Beverage 's (NASDAQ:MNST) virtual shareholder meeting saw the company offer an update on energy drink category trends in the U.S. and internationally, results from recent innovation, and commentary on pricing, promos, and leadership.
However, analysts at Citi believe the company's shares will remain under pressure following the event, while Morgan Stanley lowered its estimates for the stock, citing further weakness in U.S. scanner data.
Citi said the company acknowledged the recent slowdown in the energy drink category but commented that they believe the softness is temporary, and they are optimistic about the second half of the year, including a 5% U.S. price increase in Q4.
"MNST highlighted that sales growth remains strong in international markets, with solid category growth and share gains," said analysts. "Overall, we see near-term risk to numbers and stock sentiment as long as the U.S. data remains soft, but we remain Buy rated as we still see strong growth in international markets and believe the slowdown in the U.S. is somewhat reflected in the ~18% QTD stock decline."
"However, we acknowledge the stock will likely remain under pressure until there are signs of improvements in U.S. scanner data," they concluded.
Morgan Stanley said there was not a lot of new news from the event. However, the bank lowered its price target for the stock to $60 from $65 per share, maintaining an Overweight rating.
"We are lowering our 2Q US OSG estimate for MNST from +2.0% to +0.5%. MNST's sales trends in U.S. tracked channels have continued to deteriorate, decelerating from +9.9% in 3Q23 to +5.7% in 4Q23, +0.6% in 1Q24, and -1.3% in 2QTD (through June 1), driven by weak category growth and MNST share losses," said analysts at the bank.
The bank believes the category slowdown has been driven by weakness in low-end consumer spending, reflected in softer traffic and lower spending in the convenience and gas channel, which accounts for >60% of energy drink sales. Additionally, Morgan Stanley took a more conservative view of MNST's international growth.