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Monster's International Growth May Be 'Too Aggresive,' According To Citi

Erika Janowicz

In a report published Thursday, Citi analyst Wendy Nicholson analyzed energy drinks across 17 countries in various markets. Although Red Bull dominates market share in almost every region, Nicholson noted that Monster Beverage Corporation (NASDAQ: MNST) continues to gain market share.

The analyst remarked on Monster's market share trends, which have generally gained in the past five years compared with Red Bull's slight decline. In addition, Citi sees the company's growth potential is “clearly a positive."

Despite anticipated growth and opportunities overseas, Nicholson fears the expected rate for growth may be too aggressive given the company's track record. The analyst wrote, “growth overseas has presented the company with some challenges in recent years including regulatory pushback in Brazil and South Korea, which caused delays in product launches, as well as product damage issues in Japan, which have led to ongoing operating losses in multiple regions.”

Citi sees China, the United Kingdom, Japan, Brazil, and Germany as the next largest markets of the 17 markets analyzed. Nicholson reported that the United States remains the leader of the energy drink category with 40 percent of the total sales generated by the 17 markets.

The analyst has a Neutral rating and $73.00 price target on Monster Beverage.

Shares of Monster closed at $69.36 on Thursday. The stock gained 0.5 percent shortly after Friday's opening. Shares saw some profit-taking and fell to 69.08 Friday morning. The stock is currently trading at $69.65.

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