11:38 AM EDT, 08/08/2025 (MT Newswires) -- Monster Beverage's ( MNST ) Q2 upside and strong July sales growth, among others, support Morgan Stanley's forecast for revenue outperformance, driven by strength in the energy drink category, the firm's analysts said Friday.

The beverage company late Thursday reported higher-than-expected adjusted earnings and revenue for Q2 ended June 30. July sales growth was about 23% on a constant currency basis, excluding alcohol, according to the note.

Gross margin expanded in Q2, supported by pricing, supply chain optimization and lower input costs, and while modest tariff headwinds are expected in Q3, the pressures will likely be offset by pricing actions in Q4, Morgan Stanley analysts said.

The ongoing structural drivers of energy drink category growth include a narrowing price gap with carbonated soft drinks, functional health benefits, product innovation attracting new consumers, and shelf space gains from alcohol products, the analysts added.

Morgan Stanley raised its price target on Monster's stock to $74 from $70 and maintained its overweight rating, "with sustained above-peer and above-consensus revenue growth potential."

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