Monster Beverage's slowdown; Sealed Air's CEO ouster: 4 big analyst cuts
Investing.com — Here is your Pro Recap of the biggest analyst cuts you may have missed since yesterday: downgrades for Monster Beverage, Morgan Stanley, FMC, CubeSmart , and Sealed Air.
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Monster Beverage slashed to Neutral
Monster Beverage (NASDAQ:MNST) was downgraded to Neutral from Overweight Tuesday by Piper Sandler, which also cut its price target to $50 from $63, highlighting accelerating sales declines.
Piper said its recent 2023 fall survey of teenagers indicated potential challenges for the company in the long run, "as Monster under-indexes with teens."
The energy drink maker is experiencing a broad deceleration in its portfolio's retail sales growth in the US, excluding Bang Energy, say the analysts. They pointed out that in the latest four weeks ending on October 8, Monster's US measured retail sales (excluding Bang) increased by 5.8%, showing a slowdown from the 8.9% growth observed in the previous four weeks.
Sales of Monster Energy, one of the company's key products, grew by 3.7% in the most recent four weeks, which is a notable decrease from the 14.8% growth recorded in the four weeks prior.
“Current slower momentum in US scanner data, coupled with longer-term risks from teens adopting the brand at a slower rate than has been true in the past make us more cautious, though we do continue to recognize the strength of its balance sheet,” Piper commented.
Shares lost ground in the premarket on the downgrade, which InvestingPro reported in real time, but the stock popped higher at the open and was recently up fractionally to $50.46 in the regular session.
Sealed Air at Neutral after CEO booted
William Blair downgraded Sealed Air (NYSE:SEE) to Market Perform from Outperform after CEO Ted Doheny was ousted both from his chief executive post and as board member on Monday.
The company said COO Emile Chammas and CFO Dustin Semach would serve as interim co-CEOs until a permanent replacement is found.
William Blair said, per their understanding, "there was intense pressure on management given the very poor performance of the stock and capital allocation decisions," leading to "increased interest externally from potential activists as well as an internal review of assets."
Shares had lost 43% year to date at the time of the ouster.
The analysts acknowledged that the company reiterated its full-year guidance Monday, but "expect a period of uncertainty to persist and await a better entry point and fundamentals. ... We obviously hate to downgrade a stock at/near the lows, especially when it is inexpensive, but we cannot justify recommending new purchases of the stock here with all of the uncertainty until a path emerges."
Shares were dragging in the premarket, but spiked at the open and were recently up 6.4% to $30.42.
FMC cut at 3 firms after guidance cut
FMC Corp . (NYSE:FMC) saw its shares plummet more than 13% Monday after the ag sciences company issued a surprise Q3 profit warning, cutting its guidance for the quarter based on Q3 volumes and continued destocking, and three Wall Street firms cut the company to neutral-equivalent ratings in response.
Morgan Stanley, for example, lowered its rating on FMC to Equalweight from Overweight, slashing the price target to $70.00 from $100.00. The analysts there expressed concerns about the company's outlook for 2024 and acknowledged a mistake in their prior call.
BofA Securities shifted to Neutral from Buy, slashing the price target by $38 to $63.00.
"Our confidence in the company’s prospects has been greatly reduced, and we lower our PO substantially at an unchanged 10x 2024E EBITDA to $63 from $101," wrote the analysts. "While we could be at the trough, 2024 doesn’t look much better."
Goldman Sachs also downgraded to Neutral, lopping $76 off its price target - to $59.00 from the prior $135.00.
After Monday's slide, shares were losing another 4.6% to $55.43 in recent Tuesday trade.
CubeSmart cut at Wells Fargo
CubeSmart (NYSE:CUBE) shares recently fell more than 2% to $34.21 after Wells Fargo downgraded the company to Equal Weight from Overweight with a price target of $37.00.
The analysts noted that they see risks to the company's 2023 guide and 2024 consensus estimates.
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