Back to top

Analyst Blog

A federal lawsuit by Monster Beverage Corporation (MNST - Analyst Report) against San Francisco City Attorney Dennis Herrera was dismissed by the U.S district court. The lawsuit was filed to stop the City Attorney from conducting investigation and statewide litigation against the company for marketing highly-caffeinated energy drinks to children. This judgment will allow the state to proceed with the litigation against the company.

According to the City Attorney, pediatric studies indicate that highly caffeinated energy drinks are harmful for children and claimed that the company needs to change its marketing strategy. The marketing of energy drinks should not target young children or athletes.

Monster Beverage has been facing several legal issues related to the impact of its energy drinks on consumer health.

We note that, in June, the American Medical Association (AMA) House of Delegates proposed a ban on marketing of energy drinks.

In Aug 2012, according to The Wall Street Journal, New York's attorney general initiated a probe to determine whether leading energy drink makers have misled their consumers about the ingredients and nutritional value of energy drinks manufactured by them. The investigation asked for information from three large companies, namely PepsiCo Inc. (PEP - Analyst Report), Monster Beverage and Living Essentials LLC. The investigation was intended to check the amount of caffeine and other artificial ingredients added to the drinks such as fruit flavors, vitamins B, taurine and ginseng.

However, earlier this month, Monster Beverage claimed that leading energy drinks contain half the amount of caffeine compared to coffee from companies such as Starbucks Corp. (SBUX - Analyst Report).

Monster Beverage Corporation carries a Zacks Rank #4 (Sell). A better ranked company in the beverage sector is Dr Pepper Snapple Group Inc. (DPS - Analyst Report), carrying a Zacks Rank #2 (Buy).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
RPC INC RES 24.91 +8.35%
LITHIA MOTO… LAD 94.59 +4.60%
DELTA AIR L… DAL 39.15 +3.90%
FLAMEL TECH… FLML 14.51 +3.50%
SOUTHWEST A… LUV 28.87 +2.92%