Goldman Sachs removed Monster Beverage Corp from its conviction buy list after the U.S. Food and Drug Administration said it was investigating reports of five deaths that may be linked to the company's namesake energy drinks.
Shares of the company, which makes drinks such as Java Monster, Monster Rehab, and X-Presso Monster, fell 7 percent to $42.38 in late morning trade on Tuesday.
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Monster is also being sued by the family of a 14-year-old Maryland girl with a heart condition who died after drinking two cans of its Monster energy drink in a 24-hour period.
The FDA said on Monday it was investigating possible links between the company's drinks and five deaths.
"While the FDA has yet to establish a causal link between these deaths and the drink, we believe MNST shares could be range-bound in the near term," analyst Judy Hong wrote in the note.
As of Monday, Monster's stock had fallen 5.7 percent since being added to Goldman's conviction buy list on January 16, the brokerage said in the note. The broader S&P 500 index rose by 11.2 percent during the same period.
Hong, however, maintained her "buy" rating on the stock saying that significant risk has already been priced into the stock.
"We do not believe these headlines will impact MNST's sales growth in the US nor do we believe the ultimate legal and regulatory outcome will be a significantly onerous one."
Monster Beverage's shares were down 5.6 percent at $43.12 on the Nasdaq.
(Reporting by Siddharth Cavale; Editing by Sreejiraj Eluvangal)