Analyst Downgrades Monster Beverage On Coca-Cola Concerns

Guggenheim sees Cola-Cola's new energy drinks as stiff competition

Managing Editor
Oct 2, 2019 at 9:51 AM
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The shares of Monster Beverage Corp (NASDAQ:MNST) are lower this morning, after Guggenheim cut its rating to "neutral" from "buy." The analyst in coverage also slashed their price target to $60 from $74, and noted that they see Coca-Cola's (KO) foray into the energy drink business as a big headwind. 

At last check, Monster Beverage stock was down 2.5% to trade at $54.99, on track for its lowest close since mid-April. Since an early-August bear gap, MNST has spent the past two months consolidating between the $56-$60 levels, with its 160-day moving average looming just above. 

Options traders have targeted puts in recent weeks. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), MNST's 10-day put/call volume ratio of 1.79 ranks in the 81st annual percentile, meaning puts have been bought to open relative to calls at a quicker-than-usual clip.

Those traders may be on to something, as now looks to be an attractive time to jump on the security with options. The equity's Schaeffer's Volatility Index (SVI) of 28% registers in the low 19th percentile of its annual range, meaning near-term options premiums are pricing in unusually low volatility expectations.

Plus, the equity's Schaeffer's Volatility Scorecard (SVS) of 89 (out of 100) shows Monster Beverage stock's strong tendency to make bigger-than-expected moves during the past year, relative to what the options market was pricing in.


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