Analyst Update: Monster Beverage Corp, Molycorp Inc, and Under Armour Inc

Analysts offered their two cents on MNST, MCP, and UA

by Andrea Kramer

Published on Nov 7, 2014 at 1:17 PM
Updated on Apr 20, 2015 at 5:32 PM

After initially ticking lower, U.S. stocks are teetering near record highs, as traders weigh a mixed payrolls report. Among equities attracting the attention of analysts are drink maker Monster Beverage Corp (NASDAQ:MNST), rare earths concern Molycorp Inc (NYSE:MCP), and athletic apparel issue Under Armour Inc (NYSE:UA).

  • MNST is up 6.9% at $107.45, and earlier notched a new all-time high of $108.28, as shareholders and analysts applaud a stronger-than-expected third-quarter earnings report. No fewer than five brokerage firms upped their price targets on MNST, and J.P. Morgan Securities hiked its full-year earnings projections. "With above-average growth and support from a massive share repurchase program, Monster is our top beverage pick," the analysts wrote. The shares are now up nearly 59% in 2014, yet there's still plenty of room on the bullish bandwagon. Six out of 11 analysts maintain tepid "hold" recommendations, and the consensus 12-month price target of $105.29 sits at a discount to Monster Beverage Corp's current price. Plus, on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 50-day put/call volume ratio of 0.85 stands higher than 96% of all other readings from the past year, pointing to a much healthier-than-usual appetite for long puts over calls during the past 10 weeks.

  • MCP is 4.3% higher at $1.33, paring a portion of yesterday's post-earnings losses. Nevertheless, DA Davidson cut its price target to $4 from $6, but echoed its "buy" rating on the shares, which have surrendered more than three-quarters of their value in 2014. Not surprisingly, most analysts are already in the bears' corner, as Molycorp Inc boasts just one "strong buy," compared to one "hold" and two "strong sell" suggestions. Echoing that skepticism, short interest accounts for more than one-third of MCP's total available float, representing nearly 14 sessions' worth of pent-up buying demand, at the stock's average pace of trading.

  • Finally, FBR weighed in on UA -- as well as sector peer Nike Inc (NYSE:NKE) -- offering up a fresh "outperform" rating and $81 price target, which represents expected upside of 20.2% to UA's current perch of $67.36, and stands in uncharted territory for the shares. As such, UA is up 1.6% today, bringing its year-to-date gain to an impressive 54.3%. Despite the security's solid performance in 2014, Wall Street remains wary. More than half of the analysts following Under Armour Inc maintain "hold" or "sell" opinions, and it would take nearly a week to buy back all of the shorted UA shares, at the equity's average daily trading volume. Furthermore, the stock's Schaeffer's put/call open interest ratio (SOIR) of 1.01 stands higher than 67% of comparable readings from the past year, implying short-term options traders are more put-heavy than usual right now. A widespread reversal in sentiment could lure more buyers to UA's bandwagon.

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