Monster Falls as Analyst Downgrades Stock on Sales Expectations

Monster Beverage Corp. fell the most in five months after Wells Fargo & Co. analyst Bonnie Herzog downgraded the stock, saying she expects softer results in the near term and a lack of new products.

Data from Beverage Buzz and Nielsen indicate Monster’s second-quarter sales growth may be weaker than expected, Herzog said in a note Monday. Also, the company’s new Mutant and Hydro drinks aren’t likely to hit shelves until the fourth quarter, she said. Herzog cut her rating on the stock to market perform, a neutral rating, from the equivalent of a buy.

“While we have a very favorable outlook in the long term, over the near term we have concerns given soft results in Q2 and delays in launching new innovation,” Herzog said.

Monster has been expanding distribution of its energy drinks in the U.S. and internationally, helped by an agreement reached with Coca-Cola Co. last year. Herzog said Monster’s international growth will be tempered by macroeconomic challenges, difficulties handing over some territories to Coca-Cola bottlers and a slower-than-hoped-for introduction in China.

The shares fell as much as 5.3 percent to $153.09, the biggest intraday decline since Feb. 8. Corona, California-based Monster had risen 8.5 percent this year through last week.

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