Monster shares rise as sales growth continues

NEW YORK (AP) -- Shares of Monster Beverage Corp. advanced Thursday after the company said its profit rose 5 percent in the fourth quarter, despite the bad publicity surrounding the caffeine content in its energy drinks.

THE SPARK: Monster said after the market closed Wednesday that its net income increased to $68 million, or 39 cents per share, from $64.5 million, or 35 cents per share, a year earlier. Revenue grew 15 percent, to $471.5 million. Analysts expected 41 cents per share and $482.2 million in revenue, according to FactSet.

THE BIG PICTURE: In recent months the Corona, Calif., company has faced increased scrutiny from lawmakers, and the Food and Drug Administration has disclosed that it is investigating reports of five deaths and a non-fatal heart attack in people who drank its beverages. The FDA has noted that the reports do not necessarily prove the drinks caused the incidents.

In a conference call with analysts Wednesday, Monster stood behind the safety of its drinks, noting that each has less caffeine than a comparable size of Starbucks coffee. It also said that it had provided lawmakers with documentation substantiating the safety of its products and intends to "vigorously defend" against ongoing litigation.

THE ANALYSIS: Stifel analyst Mark Astrachan kept his "Buy" rating on the company, noting that Monster continues to deliver solid double-digit sales growth in spite of regulatory concerns and difficult comparisons from previous years of strong growth. He expects the company to keep recording low double-digit sales growth over the next three to five years, driven by U.S. category growth, innovation and international expansion.

Goldman Sachs analyst Judy Hong, who also kept her "Buy" rating on the company, noted the international sales outlook is strong and profitability is building.

SHARE ACTION: The stock rose $2.38, or 4.8 percent, to $52.