Monster falls as Roth analysts cut targets amid growth concerns

Investing.com - Monster Beverage Corp (NASDAQ:MNST) dipped 2.7% on Wednesday after Roth analysts lowered their price target despite the successful completion of the company's Dutch tender offer.

The company's recently concluded Dutch tender offer, which amounted to $3 billion, was completed at a final price of $53 per share. This was at the lower end of the initially anticipated range of $53-$60 per share. The buyback was financed with a mix of $2.25 billion in cash and $0.75 billion in debt, reducing the overall share count by 56.6 million.

Roth analysts have stated that while the Dutch tender offer doesn't affect their revenue or EBITDA estimates, the lower share count, offset by a reduction in interest income, has led to an increase in their EPS estimates.

This increase is expected to grow over time as cash balances recover and the share count remains lower. The revenue and EBITDA estimates for 2025 stand unchanged at $8.8 billion and $2.8 billion, respectively.

However, the EPS estimates have been raised by $0.04 in 2024, $0.14 in 2025, and $0.27 in 2026.

Despite the positive implications of the lower share count and increased EPS, the decision to reduce the target price arises from concerns over slowing growth in Monster's core US energy drink sales.

This slowdown, as reflected in recent Nielsen and Circana scan data, is believed to exert a negative impact on the company's valuation.

Despite these concerns, Roth analysts expect Monster Beverage Corp to continue exhibiting financial strength, noting that, "We continue to expect MNST to generate over $2.0B in annual cash flow from operations, and to deploy the excess cash for expansion into new products as well as continued regular share repurchases."

Roth maintained a Neutral rating for Monster with a 12-month price target of 56.