Monster Beverage Corporation (MNST) shares rose nearly 2% during Friday's session after Credit Suisse called it a Top Pick for 2020. The analyst reiterated its Outperform rating and price target of $77 per share, which reflects an 18% premium to Friday's closing price.
Analyst Kaumil Gajrawala believes that the stock is entering a period of easing comparisons. With the launch of Predator, the company entered the affordable energy category in which there are fewer established competitors and potentially attractive margins. Gajrawala believes that the company's long-term growth story will drive earnings and free cash flow at compound annual growth rates of 13% and 9%, respectively, through 2023.
The move comes after PepsiCo, Inc. (PEP) and The Coca-Cola Company (KO) announced new coffee-infused drinks slated for launch in April. These drinks will contain nearly twice as much caffeine than their conventional cola drinks, while Coca-Cola's version will contain less sugar than a regular Coke. These products could compete with some energy drink products.
From a technical standpoint, the stock broke out from reaction highs to retest highs made in July 2019. The relative strength index (RSI) moved into overbought territory with a reading of 76.39, but the moving average convergence divergence (MACD) could experience a near-term bullish crossover. These indicators suggest that the stock could see some near-term consolidation before resuming its uptrend.
Traders should watch for consolidation above prior highs of around $64.00 over the coming sessions. If the stock breaks down from these levels, traders could see a move lower toward the 50-day moving average at $60.56. If the stock rebounds higher, traders could see a breakout from its July highs to fresh 52-week highs.
The author holds no position in the stock(s) mentioned except through passively managed index funds.