Trade of the Day: MNST Stock Gearing Up for a Monster Move

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Monster Beverage Corporation (NASDAQ:MNST) — Shares of MNST stock hit a new all-time high on Friday at $166.50 after the maker of popular energy drinks and other alternative beverages reported Q2 earnings. While adjusted earnings of 99 cents per share fell short of the Zacks consensus estimate, they were up 25% from a year ago. Revenue of $827.5 million was up 19% year over year and beat estimates.

Following the earnings announcement, S&P Capital IQ Equity Research reiterated its “Buy” rating on MNST stock and raised its price target by $28 to $191. Its analysts note that while the strategic partnership between Monster Beverage and The Coca-Cola Co (NYSE:KO) is causing near-term disruptions, they are cheered by early signs of sales outperformance.

In June 2015, KO took a 16.7% stake in Monster for its non-energy drink business (natural sodas, juices, smoothies, teas, lemonades and enhanced waters) and transferred its energy drink business to Monster. In addition, the deal made Coca-Cola Monster’s preferred distribution partner.

Capital IQ expects Monster to post 13% sales growth this year, driven by new product launches, price increases and international expansion. Operating EPS is estimated to increase 31% in 2016 to $3.93 and another 21% in 2017 to $4.75.

Turning to the chart, we see that following a decline from about $160 in December, MNST stock formed a “W” bottom from February to late April. It broke from that formation, vaulting up on high volume propelled by a huge breakaway gap. The gap pushed shares through the 200-day moving average and into a bull channel that was confirmed by consistent higher highs and higher lows within a range of about 10 points.

Following a new high on Friday, MNST stock predictably fell to its bull channel support line at about $158.

Traders should look to buy shares under $160 for a trade to $200 for a potential return of at least 25%. Long-term investors may also want to buy MNST stock for an even greater percentage return since point-and-figure analysis renders a target of $232, almost 45% above the current price.

MNST Stock Chart
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Article printed from InvestorPlace Media, https://investorplace.com/2016/08/monster-beverage-corporation-mnst-stock-trade-day/.

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