- Stifel is out with some interesting comments on Hansen Natural (NASDAQ:HANS) today saying that contrary to the 10% short interest in the shares, they would be surprised to see the company miss their 2007 and 2008 EPS estimates of $1.53 and $2.11, respectively, or annual growth of 37% and 38%. This is because of firm's continued bullishness on the energy segment and Hansen's untapped share potential.
As for the near term, they are $0.02 below Street consensus for 1Q and believe actual results may fuel worries that the cost of doing business is increasing. For example, firm's trade sources indicate that unit selling and promotion expenses for Monster and other Hansen products is up in the 1Q, although the Anheuser-Busch system is funding an unknown portion of the increase. They believe that the majority of the increase relates to athlete and event sponsorships, which collectively account for a small percentage of the company's overall promotion and selling expenses. However, a material increase in this item and/or an unexpected or material step-up in more conventional selling expenses may be interpreted as an increase in the cost of doing business. Firm believes this is not the correct interpretation of this result. For a number of selling and promotional items, the company amortizes the expense over the course of the year. Therefore, the potential exists for promotional programs to increase 1Q expenses before the marketing program has had the opportunity to improve sales. The result is that volume growth lags the increase in spending.
Again, they like HANS shares and so become more aggressive if they experience weakness on 1Q results. Maintains Buy and $46 tgt.
Notablecalls: Interesting comments from Stifel's Mark Astrachan. Despite the somewhat cautious tone of the call, I don't think there will be any real damage to the stock price. This looks to be just another case of analyst trying to hedge his position. If indeed HANS comes in a penny or two shy bc of marketing costs, we will likely see a nice bounce after the initial sell-off. Note that Stifel's channel checks do not indicate that the category has become increasingly dependent on promotional activity to drive growth. All in all, expect to see some s-t weakness in HANS today. But nothing major.
As for the near term, they are $0.02 below Street consensus for 1Q and believe actual results may fuel worries that the cost of doing business is increasing. For example, firm's trade sources indicate that unit selling and promotion expenses for Monster and other Hansen products is up in the 1Q, although the Anheuser-Busch system is funding an unknown portion of the increase. They believe that the majority of the increase relates to athlete and event sponsorships, which collectively account for a small percentage of the company's overall promotion and selling expenses. However, a material increase in this item and/or an unexpected or material step-up in more conventional selling expenses may be interpreted as an increase in the cost of doing business. Firm believes this is not the correct interpretation of this result. For a number of selling and promotional items, the company amortizes the expense over the course of the year. Therefore, the potential exists for promotional programs to increase 1Q expenses before the marketing program has had the opportunity to improve sales. The result is that volume growth lags the increase in spending.
Again, they like HANS shares and so become more aggressive if they experience weakness on 1Q results. Maintains Buy and $46 tgt.
Notablecalls: Interesting comments from Stifel's Mark Astrachan. Despite the somewhat cautious tone of the call, I don't think there will be any real damage to the stock price. This looks to be just another case of analyst trying to hedge his position. If indeed HANS comes in a penny or two shy bc of marketing costs, we will likely see a nice bounce after the initial sell-off. Note that Stifel's channel checks do not indicate that the category has become increasingly dependent on promotional activity to drive growth. All in all, expect to see some s-t weakness in HANS today. But nothing major.
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