On Thursday, Stifel reaffirmed its positive stance on Celsius Holdings (NASDAQ:CELH), maintaining a Buy rating and a price target of $45.00. The stock, currently trading at $27.09, has experienced significant pressure, falling over 57% in the past six months.
According to InvestingPro analysis, the company maintains strong financial health with a GREAT overall score. The firm's analysis follows recent discussions with the management of Celsius, where several strategic initiatives were highlighted.
These initiatives are aimed at addressing the company's recent challenges in the U.S. energy drink category, where it has experienced volatile sales and a slight loss in market share amidst an overall accelerating sales growth in the sector.
Despite these challenges, InvestingPro data shows the company maintains robust financials with a current ratio of 4.71 and impressive revenue growth of 19.36% over the last twelve months.
Celsius management has outlined a series of marketing and innovation strategies intended to reverse the trend of declining sales velocities. The company expressed its expectations for improved sales velocities in 2025, with plans to adjust its media mix to better target key demographics and increase purchase frequency. Additionally, management signaled a shift towards more significant innovation beyond the previously announced flavor extensions, including the potential introduction of new product formats like powders and limited-time offerings (LTOs).
The company also indicated that it anticipates an increase in shelf space in 2025, which could potentially bolster its market presence and consumer accessibility.
Despite these forward-looking plans, Stifel has decided to maintain a fourth-quarter sales estimate for Celsius that is below the consensus. The firm's estimate stands at $323 million compared to the consensus estimate of $336 million. This conservative stance takes into account the impact of Pepsi destocking at the higher end of the indicated range, which reflects the slower sales growth and increased year-over-year promotional allowances faced by Celsius.
For deeper insights into Celsius's valuation and growth prospects, including 16 additional ProTips and comprehensive financial analysis, visit InvestingPro.
In other recent news, Celsius Holdings reported a significant decrease in third-quarter revenue for 2024, falling 31% to $265.7 million from $385 million in the same quarter last year.
The company also reported a sharp decline in net income to $6.4 million, down 92% from the previous year's $83.9 million. Despite these results, analysts from Needham initiated coverage on Celsius Holdings, bestowing a buy rating and setting a price target of $38, forecasting brighter prospects for the company looking ahead to 2025.
Morgan Stanley (NYSE:MS) maintained its Equalweight rating on shares of Celsius Holdings, observing a slight deceleration in the company's year-over-year sales growth. Meanwhile, Deutsche Bank (ETR:DBKGn) initiated coverage on Celsius Holdings with a Hold rating, citing potential for a rebound in the energy drink sector by 2025. Furthermore, JPMorgan initiated coverage with an Overweight rating due to improving category trends.
Despite strong fundamentals, including a healthy current ratio of 4.71 and robust revenue growth of 19.4% in the last twelve months, Celsius had become the first brand to exceed a 10% market share, and there was a prevailing expectation that, with the support of the distribution partnership with PepsiCo (NASDAQ:PEP), its market share would climb to 20%.
However, since the spring, Celsius's market share has plateaued, hovering between 10-11%. These are recent developments for the company, which maintains a strong cash position with over $900 million in reserves and plans to drive growth through promotional activities and new product launches into 2025.
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