Analysts raise targets on Hansen after strong results

venerdì 8 maggio 2009 17:06

   By Amitha Rajan
 BANGALORE, May 8 (Reuters) - At least four analysts raised
their target prices on the shares of Hansen Natural Corp
HANS.O, which sells the Monster Energy drink, a day after the
company posted a quarterly profit ahead of expectations as its
energy drinks continued to perform well and gain share.
 Shares of the company rose as much as 10 percent to $41.88,
before paring some gains to trade up $2.91 at $40.97 in morning
trade on Nasdaq.
 Analysts attribute Hansen's performance to effective cost
controls and better-than-expected contribution from
international sales, which drove margins significantly higher.
 International revenue jumped more than 75 percent, while
selling expenses as a percentage of net sales were 12.5 percent
in the first quarter, compared with 14.9 percent a year ago.
 Gross margin in the first quarter rose to 46.7 percent from
42.9 percent a year earlier. [ID:nBNG495812]
 "We continue to expect that international sales will be a
significant growth driver for Hansen going forward, especially
as  the company successfully transitions into the Coke systems
in the U.S., Canada and Western Europe," analyst Mark Astrachan
of Stifel Nicolaus said.
 According to analyst Kaumil Gajrawala of UBS, international
sales now represent 13 percent of total sales versus 8 percent
as of Dec. 31.
 "Going forward, our international expectations assume
Hansen's market share in its Western Europe markets is about 6
to 7 percent in 2009," Stifel's Astrachan said.
 Hansen, which signed a distribution agreement with
Coca-Cola Co (KO.N: Quotazione) and its largest bottler Coca-Cola
Enterprises CCE.N late last year, has launched its energy
drink, Monster, in six European countries this year.
 "While it is too early to measure the success of Monster's
penetration into Europe under CCE's distribution, this could
provide a meaningful boost to earnings at some point in 2009,"
analyst Alton Stump of Longbow Research said.
 Analysts expect growth in international sales to help
partially offset weak U.S. energy drink sales as consumers
continue to be thrifty.
 Since its launch in the U.S. in 2002, Monster has nearly
doubled its market share and is now the leading energy drink in
the country, outstripping Austria-based rival, Red Bull.
 Under the distribution agreement with Coke, Hansen has also
launched Monster in select parts of the United States, a move
that analysts believe will further strengthen the drinks
position in the nation.
 "We believe Monster will continue to gain share over its
domestic competition, due in part to superior support from new
CCE distributors," Longbow's stump said.
 The price target changes made by the brokerages are as
                         PRICE TARGET
 BROKER NAME             NEW       OLD           RATING
 Goldman Sachs           $42       $32           Neutral
 Longbow Research        $46       $44           Buy
 Citigroup               $44       $32           Hold
 UBS                     $48       $41           Buy
 (Reporting by Amitha Rajan in Bangalore; Editing by Anil