Piper Sandler upgrades Monster to Overweight after stock pullback

Piper Sandler analysts upgraded Monster Beverage (NASDAQ:) stock to Overweight from Neutral with a price target of $63 per share.

The rating change comes about 2 months after the analysts initiated research coverage on MNST shares. At that time, they highlighted valuation as the only reason why he is sidelined.

However, following the stock pullback, they see the risk-reward as more attractive.

“Its 2Q23 results were below expectations, but there is nothing concerning about the business or its near and longterm momentum. We remain bullish on the energy drink category specifically, especially with no private label presence, and expect MNST to continue to be well-positioned, and the Monster brand (~90% of sales) has very strong brand equity,” the analysts said in a client note.

They see potential for 10-11% 3-year revenue CAGR, fueled by a strong innovation pipeline in both energy drinks and alcohol.

Monster stock rose 1.6% in pre-market Monday.