11:17 AM EDT, 08/08/2024 (MT Newswires) -- Monster Beverage's ( MNST ) revenue growth slowed in Q2 and July, mirroring a wider downturn in the energy drink sector, Morgan Stanley said in a note Thursday.

"Softness is particularly acute in the energy category with its skew to the more macro sensitive gas/convenience channel, with weakening consumer traffic, and to [Monster Beverage ( MNST )] given its low/middle-income consumer skew," Morgan Stanley said.

"Even with low expectations, [Monster Beverage's ( MNST )] Q2 (and July) revenue results were clearly worse than expected," Morgan Stanley said, adding that the company experienced a significant 5.9% revenue miss driven by declines in both international and US markets.

Regional sales varied with a 1.7% decline in the US, strong growth in Latin America at 14.1% in dollars and 39% in local currency, supply chain issues impacting Europe, the Middle East and Africa, and mixed results across Asia-Pacific, Morgan Stanley said.

Looking ahead, revenue softness is expected to persist, leading to a revised forecast of low-single-digit revenue growth in the near term, the note said.

Morgan Stanley has an overweight rating on Monster Beverage ( MNST ) with a price target of $55, down from a prior target $60.

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