Transferring Coverage of Narrow-Moat Monster Beverage; Shares Still Trade at a Premium
We are reiterating our $39.50 fair value estimate after transferring coverage of Monster Beverage to a new analyst, which implies a forward 2017 P/E ratio of 27 and enterprise value/adjusted EBITDA of 17. We still believe that the firm’s brand intangible assets have allowed it to capture significant market share (around 40% of volume in the U.S.) and warrant a narrow economic moat, given that brand-loyal customers are willing to pay a premium price for energy drinks because of their perceived fu...Monster Beverage is a holding company. Through its subsidiaries, the company develops, markets, sells and distributes energy drink beverages and concentrates for energy drink beverages. The company has the following operating and reportable segments: Monster Energy? Drinks segment, which is primarily comprised of the company's Monster Energy? drinks and Reign Total Body Fuel? energy drinks; Strategic Brands segment, which is comprised primarily of the various energy drink brands from The Coca-Cola Company, as well as its energy drinks; and Other segment, which is comprised of certain prod ucts sold by American Fruits and Flavors, LLC, a wholly-owned subsidiary, to independent third-party customers.
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