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Monster stock hits 52-week high after 2Q results

NEW YORK (AP) -- Shares of Monster Beverage Corp. had a volatile day of trading Friday after the energy drink maker reported a lower quarterly net income that missed Wall Street expectations.

THE SPARK: After the market close Thursday, the Corona, Calif.-based company said its net income for the period fell 3 percent as distribution costs rose and it continued to pay legal expenses related to questions about the safety of its beverages.

Monster said it paid $5 million for professional services, most of it because of regulatory issues and litigation about Monster Energy drink's ingredients and advertising.

The company has steadfastly stood by the safety of its drinks.

THE BIG PICTURE: Although they remain a relatively small part of the broader beverage industry, energy drinks have surged in popularity in recent years. But the runaway growth has been hampered more recently by concerns over the caffeine levels and other ingredients in the drinks.

Monster has been pushing back aggressively and earlier this year hit back at a lawsuit by the family of a teenage girl who died after drinking two large cans of the company's drinks. The company noted at a news conference that no blood test was performed to confirm the girl had died of caffeine toxicity.

Citi analyst Wendy Nicholson noted Friday that the company's sales accelerated in the second quarter from the first quarter, with improving category trends playing a role. As for the slowdown in international sales, she noted that management had a variety of explanations, such as including the U.S. military's reduction of troops overseas.

The company's overall revenue rose 7 percent to $723.9 million for the period. Once promotional allowances are accounted for, revenue was $630.9 million. Analysts were expecting revenue of $650 million.

SHARE ACTION: The stock rose $1.49, or 2 percent, to $64.96 after hitting a 52-week high of $66.12. The stock had been down 7 percent in premarket trading.