Goldman Sachs has cited a number of reasons to buy stock in Monster Beverage Corp. after analysts attended its investor meeting in New York.
Sales have climbed nearly 20 percent during the three-week period ending Oct. 20, new products are demonstrating success, and the Corona, Calif.-based company is rapidly building share outside the United States, wrote Judy Hong, a Goldman Sachs analyst, in an equity report Wednesday.
Monster is said to have inked a distribution agreement with Ambev in Brazil — a deal that Hong expects will be beneficial given the size of the energy drink market in the South American country.
The analyst also pointed out that Monster (MNST) has bought back more than $300 million in shares in the fourth quarter.
Monster has come under the microscope of federal regulators over the last several weeks following reports that link its beverages to five deaths, and the U.S. Food and Drug Administration (FDA) has revealed in a letter to U.S. Sen. Dick Durbin it is investigating those deaths and the safety of the energy drink market.
In a report last month, Hong expressed her view that the regulatory exposure is manageable. "Our overall impression of the FDA letter would be that, at this point, the FDA has little reason to think energy drinks are unsafe when used in a responsible manner and to the extent energy drinks are used "inappropriately" the FDA has no jurisdiction to take action against the manufacturer," Hong wrote.
Still, Monster is facing an increasing number of lawsuits, including a class action complaint filed yesterday.
The stock price has rebounded significantly since early November when it plunged to a 52-week low ($39.99). Shares on Thursday were down nearly 4 percent, closing at $54.69.
