Piper Sandler has confirmed its Overweight rating on Celsius Holdings (NASDAQ: NASDAQ:CELH) with a consistent price target of $47.00.
The firm adjusted its model for the beverage company, anticipating a potential increase in inventory adjustments in the fourth quarter of 2024.
The revised forecast is based on new insights suggesting that the previously estimated distributor inventory levels might have been higher than optimal.
The analysis by Piper Sandler indicates that, according to discussions with beer distributors, holding 14-21 days of inventory is considered ideal. This information has led to a recalibration of the fourth-quarter estimates for Celsius Holdings.
Despite the adjustment in inventory expectations, the firm's outlook for the company's sell-through momentum remains positive.
Celsius Holdings continues to perform strongly with teenagers, as evidenced by the latest Fall 2024 teen survey conducted by Piper Sandler. The survey results show that Celsius has a roughly 15% share among teens, which is 35% higher than its general market share of approximately 11.5%, according to SPINS/IRI data. However, it's notable that this is a slight decrease from a 17% teen market share reported in Spring 2024.
In other recent news, Celsius Holdings reported a 23% increase in total revenue, hitting a record $402 million, and a 30% rise in international revenue to $19.6 million. However, the company is also dealing with the impact of inventory reductions by PepsiCo (NASDAQ:PEP), which are expected to significantly affect sales and EBITDA for the third quarter and full year of 2024.
In response, several financial firms, including Jefferies, Roth/MKM, and Piper Sandler, have revised their price targets and revenue estimates. Stifel maintains a positive outlook on Celsius, predicting an improvement in convenience store sales by 2025, while Jefferies and Piper Sandler have reduced their price targets to $48 and $47 respectively.
Furthermore, Roth/MKM adjusted its price target to $43 due to concerns over inventory and promotional impacts. On the corporate side, Celsius has seen significant board changes with Hans Melotte, an experienced executive from Starbucks (NASDAQ:SBUX) and Johnson & Johnson, joining the board following Jim Lee's resignation.
InvestingPro Insights
Adding to Piper Sandler's analysis, recent data from InvestingPro provides further context on Celsius Holdings' financial position and market performance. The company's market capitalization stands at $8.12 billion, reflecting its significant presence in the beverage industry. Celsius has demonstrated impressive revenue growth, with a 56.5% increase in the last twelve months as of Q2 2024, aligning with the strong sell-through momentum noted by Piper Sandler.
An InvestingPro Tip highlights that Celsius is trading at a low P/E ratio relative to its near-term earnings growth, with a current P/E ratio of 33.39. This could suggest potential undervaluation, especially considering the company's robust revenue growth. Additionally, Celsius holds more cash than debt on its balance sheet, indicating financial stability amidst its rapid expansion.
However, investors should note that the stock has experienced significant volatility, with a 33.84% price decline over the past three months. This volatility aligns with another InvestingPro Tip stating that Celsius's stock price movements are quite volatile, which may be a consideration for risk-averse investors.
For those seeking a more comprehensive analysis, InvestingPro offers 16 additional tips for Celsius Holdings, providing a deeper understanding of the company's financial health and market position.
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