The stock of Monster Beverage Corp., (NASDAQ: MNST), fell 3% after Rothschild & Co Redburn lowered the rating from Buy to Neutral.
The company also reduced the price of its target product from $60 to $63
This decision was made in response to the announcement by the U.S. Government to increase import tariffs from 25 to 50 percent on aluminum, a material used to package the energy drinks of the company.
Redburn’s research report indicates that higher aluminum prices will likely pressure profits in 2026.
The US Price Increases that help offset current input costs are expected to expire.
Analysts have expressed concern about Monster’s projected growth in gross margins for that year.
This downgrade is despite the relatively stable trading level.
According to 23 analyst’s one-year predictions, MNST has an average price target of $62.28, which represents a mere 1.12% increase from its latest stock price of $61.59.
The lowest estimate was $49.00, and the highest $72.
Increased margins when sales are down
Monster’s Q1 earnings report, released in May, reported net sales at $1.85bn, down 2.3% from Q1 2024, when it was $1.9bn.
The gross margin increased to 56.5% from 54.1% one year ago, which indicates improved cost-efficiency.
Operating income increased 5.1%, to $569.7 millions, while the net profit was almost flat, at $443million, as compared with $442million in the previous quarter.
Earnings per share (EPS), diluted, rose 7.4% to $0.45.
The company has also been able to lower operating costs from $485,1 million to $478.2 millions in the first quarter of 2024.
In spite of these gains in operational efficiency, the net sales have been negatively affected due to adverse currency exchange effects totalling $57.3 millions, and bottlers’ and distributors’ ordering patterns.
The sales of Monster, the brand’s flagship brand, grew by 8.7% in the 13 weeks ending on April 26th 2025. Rain saw a decline of 9.9%.
Monster’s share of the US convenience channel and gasoline market has dropped from 29,2% to 29%.
Strength of International Relations
The international markets have been a positive in this quarter.
In a currency neutral basis, Monster’s net sales outside of the US increased by 6.2% and reached $790.5 millions.
Sales in China increased by 40.1% and in Oceania, they increased by 21.6%.
Predator is expanding in China and India, which are considered strategic growth markets for the company.
Monster has introduced new products and flavors in multiple regions including North America and Latin America. Canada and EMEA are also included.
Monster has gained market shares in Belgium, Germany and Denmark as well as Great Britain and the Czech Republic.
Not all segments have performed the same. The segment Alcohol Brands posted net sales at $34.7 million. This represents a 38.1% drop from last year.
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