Wells Fargo C-Store Survey Predicts Monster Growing Pains for Q2

wells fargo logoWells Fargo Securities analyst Bonnie Herzog has previously warned about the possibility of Monster Beverage experiencing some growing pains in its transition to the Coca-Cola Co. distribution system. Herzog’s latest report suggests that time has come. Based on Wells Fargo’s “Beverage Buzz” survey, which polls over 15,000 convenience stores nationwide, Herzog projected a softened net sales growth of 8 percent for the second quarter of the year for Monster and lowered Monster’s earnings per share (EPS) estimates.

Even though Herzog remained bullish on Monster’s long term outlook, she predicted continued “headwinds related to the [Coca-Cola] deal and international currency devaluation relative to the dollar” for the remainder of the year.

“We see the risk/reward ration as unfavorable heading into the quarter, as we believe Q2 results have limited upside earnings beat potential given the numerous potential headwinds that may have impacted results,” she wrote.

On the whole, however, C-store beverage sales remained strong this quarter, three months after Herzog predicted “a banner year for the beverage industry” in April. Crediting “solid pricing and modest volume gains” Wells Fargo raised its earnings per share (EPS) estimates for Dr Pepper Snapple Group and Coca-Cola Enterprises and maintained them for The Coca-Cola Company, which she wrote “is well positioned to continue to deliver on or exceed the Street’s modest FY15 expectations during the second quarter of its “transition year”.

The Coca-Cola company will release its second quarter 2015 financial results on Wednesday, July 22 in an investor conference call.