Vita Coco 's stock should soar in the months ahead as demand for coconut water continues to grow, according to Goldman Sachs. Analyst Bonnie Herzog initiated coverage of the stock with a buy rating, saying in a note to clients Monday that the trend toward coconut water should continue and that a potential decrease in shipping costs should improve Vita Coco's profitability outlook. "Given COCO's recent topline momentum (with accelerating +30-40% growth in tracked channels), we are confident that better-than-expected topline growth could be achievable," Herzog wrote. "We also expect [long-term] gross margins to benefit from easing ocean freight pressures, stepped-up higher margin innovation and leverage on strong topline growth over the next few years." Goldman set a price target of $22 per share for Vita Coco, which is about 52% above where the stock closed Friday. Shares rose 1.9% in premarket trading Monday. The difficulties of producing coconut water at scale should also mean that Vita Coco can maintain a leadership position more easily even as the industry grows, according to Goldman. "We believe the company's asset-light coconut water supply chain, which spans 10 countries, is a key competitive advantage as it is a sizable barrier to entry for new entrants," the note said. The stock had its initial public offering in October, and reception has been tepid so far. The stock priced at $15 per share, below its target range, and is yet to close above that price. -CNBC's Michael Bloom contributed to this report.
Vita Coco water.
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Vita Coco's stock should soar in the months ahead as demand for coconut water continues to grow, according to Goldman Sachs.