On Wednesday, BofA Securities updated its outlook on Celsius Holdings (NASDAQ: NASDAQ:CELH), increasing the stock's price target to $84 from $80. The firm maintained a Neutral stance on the beverage company's shares. The revision comes after a discussion with Celsius management in the wake of recent stock price volatility, which was attributed to the latest Nielsen data up to May 18th.
The company's management reaffirmed several points during the conversation. Firstly, they anticipate a continued $20 million drag on second-quarter 2024 earnings due to more streamlined inventory control with the Pepsi distribution network. Additionally, the comparison with second-quarter 2023 will reflect the absence of a $5 million boost from an inventory build that occurred last year.
Furthermore, Celsius acknowledged that its ability to predict future adjustments to inventory levels within Pepsi's distribution system remains limited. This uncertainty has been a factor in the wide range of analyst estimates for the company's second-quarter 2024 North American sales, which vary from approximately $370 million to $430 million. BofA Securities has adjusted its own sales forecast for Celsius, raising it from $385 million to $390 million.
The adjustment of the price target follows the market's reaction, which appears to more fully recognize the challenges outlined by Celsius management earlier in May. These include the logistical elements of inventory management and the implications of past inventory builds on current year comparisons. Celsius Holdings' stock price movement post-earnings seems to have factored in these reiterated insights from the company's leadership.
InvestingPro Insights
As BofA Securities revises its stance on Celsius Holdings, it is crucial to consider the company's financial health and market performance. According to InvestingPro data, Celsius boasts a robust market capitalization of $19.33 billion and has experienced a significant revenue growth of 81.22% over the last twelve months as of Q1 2024. This growth is further highlighted by an impressive year-to-date price total return of 52.09%, showcasing the company's strong market presence.
InvestingPro Tips reveal that analysts are optimistic about Celsius's sales growth in the current year, which aligns with BofA Securities' updated sales forecast. Additionally, the company's strategic financial positioning is evident as it holds more cash than debt on its balance sheet, which could provide resilience against market volatility. However, it is important to be aware that the stock has experienced notable price fluctuations recently, with a one-week price total return showing an 11.31% dip.
For investors seeking a deeper dive into Celsius Holdings' prospects, there are over 15 additional InvestingPro Tips available, which can be accessed by visiting https://www.investing.com/pro/CELH. To further enhance your investment strategy, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro, where you can find comprehensive analysis and real-time data to inform your decisions.
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