Monster Beverage's shares got a boost on Wednesday, after Credit Suisse named the stock one of its top picks based on valuation.
The energy drinks maker ‘s stock is down more than -10% over the past four weeks. Credit Suisse analysts gave Monster shares a $77 price target, representing 36% potential upside from the stock's previous close.
Monster shares have been hurt by its second-quarter sales and earnings figures (reported early August) that fell short of the Street expectations. Also, there have been apparent concerns over sales of its new recent fitness beverage Reign, which haven’t been as strong as expected.
However, at a price multiple of 26 times expected earnings over the next 12 months, Credit Suisse analyst Kaumil Gajrawala views Monster Beverage shares as “cheap, given best-in-class growth prospects, low capital needs, and a clean balance sheet” . That multiple is lower than the stock’s five-year average of nearly 33 times, according to FactSet, and closer to lows of 24 times.
Gajrawala projects Monster’s revenue growth to be +10% this year, while expecting its EPS to increase +14%.
Monster Beverage shares climbed more than +2% on Wednesday.