Monster Beverage's (MNST - Get Report) recent downturn provided a buying opportunity for investors, according to Credit Suisse, which on Wednesday named the energy-drink company one of its top picks based on valuation.
Year to date, Monster's stock is up nearly 20%. Over the past four weeks, however, it's down more than 10%. Credit Suisse gave Monster a $77 price target, representing 36% potential upside from the stock's previous close.
The Corona, Calif., company's stock is trading up 2.5% to $58.
"We view [the] shares as cheap, given best-in-class growth prospects, low capital needs, and a clean balance sheet," analyst Kaumil Gajrawala wrote.
The target price "is based on 33 times our 2022 earnings per share of $2.87, discounted to 2019 at 8%."
Gajrawala expects the company to increase revenue 10% this year while EPS grows 14%.
"Velocity has fallen sharply, but that is to be expected as the rollout is in early stages. That said, we note velocity was already slowing pre-launch."
Reign, a Monster news release says, is a fitness-focused beverage line with 300mg of natural caffeine with no sugar, calories and artificial flavors and colors.
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