JPMorgan thinks it’s time to buy shares of Monster Beverage . Analyst Andrea Teixeira upgraded shares of Monster Beverage to overweight from neutral ahead of the company’s third-quarter earnings results this week. She said the outlook appears rosy for the energy drink maker as supply chain pressures abate. “We think MNST is well positioned into 2023E from both organic top-line (JPMe: 11%) and bottom-line perspectives (JPMe: +31%),” Teixeira wrote in a Tuesday note. “Profitability will likely remain subdued in Q322 and Q422, but with aluminum costs alleviating and more efficient logistics back to clusters, we think the glass is half full ahead.” The analyst raised her price target to $106 from $96, representing about 13% upside from here. The stock rose 2% in the Tuesday premarket. Several challenges remain for Monster Beverage, including rising inflation and greater competition from new entrants in the field. Meanwhile, consensus estimates appear low heading into Monster Beverage’s earnings report on Thursday, as the beverage company deals with short-term excess inventory on its balance sheet, and investors worry about the firm’s gross margins, according to the analyst. Still, the analyst said those concerns may be “backward looking,” as the company is well positioned for “strong top-line performance” in the quarter, given its solid sales overseas. Shares of Monster Beverage are down just 2.4% this year. “Looking ahead, we feel comfortable that the drivers are in place for margin progression, including incremental pricing actions in US/EMEA that will flow through more fully in 4Q and abating commodity/transportation cost headwinds (although to be fair, some margin pressures may prove sticky),” read the note. —CNBC’s Michael Bloom contributed to this report.
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