Call it a case of the Mondays, but shares of Monster seemed to regain their steam Tuesday following an analyst downgrade and more litigation-related turmoil to start the week.
First, Morgan Stanley analyst Dara Mohsenian downgraded the company’s stock from overweight to equal weight, then a lawsuit began in Durant, Okla. over whether consuming the drink had led to a heart attack suffered by a teenage boy.
Shares were up a little more than 1 percent Tuesday after a 4.5 percent drop Monday.
The downgrade came as Mohsenian expressed concerns that category growth was slowing and that Monster had reached a proper valuation. The slowing took place “even as easier comparisons, favorable y-o-y weather, and less negative press on health/wellness concerns should all have buoyed results,” Mohsenian noted.
But that lack of negative press ended soon after Mohsenian issued the report, as the trial began in Durant. According to numerous reports, Angela Wheat said that her son, Jason Hamric, now 16, suffered a heart attack in November, 2011, after drinking a Monster and doing some work at a church in the town. In her role as Hamric’s guardian, Wheat is suing Monster and distributor Ed F. Davis Inc. for selling what her attorneys called a defective product.
Monster issued a statement Monday saying it was sorry that Hamric had suffered a heart attack but denied the allegations, claiming no responsibility in the case and that it was not even clear that the boy had consumed a Monster drink.
“The evidence in this case shows the only person that saw him with a drink that day was Bill Ledbetter, a pastor at the Fairview Baptist Church,” the statement noted. “When deposed and interviewed, Pastor Ledbetter stated that Jason was holding a ‘silver can’. In 2011 when this incident occurred, Monster had no product that was even close to being described, as in a silver can.”
The case is expected to last a week and may involve calling Monster executives as witnesses, according to reporting by KTEN, a Southern Oklahoma television station.