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Investing.com -- Redburn downgraded Monster Beverage Corp (NASDAQ:MNST )to Neutral saying a sharp rise in U.S. aluminum tariffs will raise production costs and weigh on margins in 2026, just as price momentum in the domestic market begins to fade.
About 95% of Monster’s U.S. packaging is aluminum-based, and aluminum made up roughly 27% of the company’s total cost of goods sold (COGS) in 2024.
That figure is expected to rise to 29% in 2025 as aluminum prices accelerate faster than other inputs in the second half of the year.
The U.S. government in June raised its tariff on imported aluminum to 50%, up from 25%, pushing the U.S. Midwest Premium, a key price benchmark, to over $1,400 per metric tonne, more than triple the 2024 average.
While Monster has hedges in place and had already raised U.S. prices by about 5% in late 2024, Redburn warned that those protections will roll off by 2026, exposing the company to significantly higher costs.
If spot rates and premiums hold steady and hedging delays are factored in, Redburn estimates a 26% rise in the all-in cost of U.S. aluminum in 2026.
That increase alone could drive mid-single-digit COGS inflation and would require a high-single-digit U.S. price hike just to maintain current gross margins.
Redburn now expects Monster’s gross margin to contract by about 70 basis points in 2026, compared with prior expectations for a slight expansion, and cut its 2025–2027 EPS forecasts by 2% to 5%.
While the firm still sees an 11% compound annual earnings growth rate over the next three years, it noted the stock’s 20% year-to-date rally leaves little room for error, with shares trading at a premium to historical averages.
Redburn lowered its price target to $60 from $63.