Monster (MNST): Growth Dead In Water, Can't Save Way To Prosperity

Monster (MNST) reported solid Q2 results yesterday, posting $0.40 in EPS vs. $0.37 consensus. Goldman Sachs analyst Peter Appert thinks that the better results were exclusively the result of cost management rather than more healthy and sustainable growth to the top line Despite the strong results, Appert remained unimpressed, and is downbeat on Monster’s prospects given continued soften in both domestic and international labour markets:

While 2Q earnings from operations were slightly better than we had modelled (EPS of $0.40 vs. our $0.36 estimate and consensus of $0.37), deteriorating revenue trends reinforce our cautious near-term view. We like Monster’s secular growth prospects and think recent strategic initiatives (including cost reduction efforts, increasing international focus and efforts to upgrade the monster.com site) better position the company for long-term growth. However, in the context of a very challenging macro backdrop with softening revenue trends both domestically and internationally, we see a continuing downward bias in estimate revisions.

Appert reiterates his Neutral rating and adjusts his estimates lower to reflect weaker revenue growth. 2008, 2009, and 2010 EPS estimates fall to $1.34, $1.60, and $1.93 from $1.42, $1.86, and $2.36.

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