Monster Fall Extended After FDA Energy Drink Death Reports

Monster Beverage Corp. (MNST), the largest U.S. energy drink maker by sales volume, fell at least 10 percent for a second day as Goldman Sachs Group Inc. removed the stock from its conviction buy list and Citigroup Inc. said the argument for a takeover has “evaporated.”

The shares slid 10 percent to $41.08 at the close in New York, extending a 14 percent drop a day earlier that was the largest since 2008 after U.S. regulators confirmed reports that the company’s energy drinks were cited in the deaths of five people in the past year. Before yesterday, Corona, California- based Monster had gained 16 percent this year.

The victims consumed Monster drinks prior to their deaths, according to incident reports that doctors and companies submit to the U.S. Food and Drug Administration. The FDA said the incidents are considered to be allegations, and no conclusion is drawn until an investigation is completed.

“Monster reiterates that its products are and have always been safe,” the company said today in a statement.

Judy Hong, an analyst with Goldman Sachs, removed Monster from a conviction buy list while still rating it a buy, according to a note yesterday.

Wendy Nicholson, a Citigroup analyst, said in a note yesterday that the share decline hasn’t made Monster a value given recent performance.

“We think the fundamental case of strong and profitable growth at Monster has weakened considerably,” she said.

Nicholson said PepsiCo Inc. (PEP)’s assertion last week that it doesn’t want to invest significant capital in energy drinks probably takes pressure off Coca-Cola Co. (KO) to acquire Monster.

In its statement today, Monster said it doesn’t believe its products are responsible for the death last year of a 14-year- old from Maryland, whose parents have sued the company.

A 24-ounce can of Monster contains 240 milligrams of caffeine, which is about 30 percent less than the average amount found in a 16-ounce cup of coffee house brew, the company said.

To contact the reporter on this story: Duane D. Stanford in Atlanta at dstanford2@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net