Monster Beverage Falls After Hours Despite Third Quarter Profits

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Monster Beverage posted double-digit profit growth in the third quarter on strong demand for its energy drinks. Still, the company’s shares fell 1.1% in Thursday’s extended trading session.

The company’s 3T EPS rose 18% year-on-year to $ 0.65 and beat analysts’ expectations by $ 0.63. Monster drinks (MNST) Third quarter profit growth was driven by higher sales and reduced sponsorship and sponsorship spending as well as travel and entertainment due to the pandemic.

Net sales rose 9.9% year-on-year to $ 1.25 billion, beating analysts’ estimate of $ 1.23 billion. Sales of the company’s Monster Energy Drinks segment (which includes Monster Energy drinks and the Reign Total Body Fuel brand) increased 9.6% to $ 1.16 billion. In addition, sales of the Strategic Brands segment (which includes the beverage brands acquired from Coca-Cola) increased 12% to $ 74.3 million.

Meanwhile, international sales rose 17% to $ 444.5 million and accounted for 36% of overall 3Q20 sales, up from 34% in 3Q19. (See the analysis of MNST shares on TipRanks)

CEO Rodney C. Sacks commented, “The company performed well in the third quarter, achieving record quarterly net sales, despite the continued impact of the COVID-19 pandemic in most of our markets. In particular, net sales in EMEA, for the Monster Energy® and Strategic Brands segments, improved sequentially in the third quarter, although the COVID-19 pandemic continued to negatively impact this region. Our supply chain remains intact and we continue to serve our customers. “

Ahead of the results release, Morgan Stanley analyst Dara mohsenian upgraded Monster Beverage to Buy from Hold and increased the price target from $ 87 to $ 90. The analyst believes that the market does not properly assess the growth potential of the company. The analyst said that a re-acceleration in sales trends in the United States coupled with “strong” international growth should boost consensus estimates and multiple expansion.

The street reflects the bullish sentiment in Mohsenian. A strong buy consensus is based on six unanimous buy scores. The average analyst at $ 91.17 price target reflects an upside potential of around 9% in the coming months. Shares have already risen 31.5% so far this year.

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