On Thursday, Stifel maintained a positive outlook on shares of Celsius Holdings (NASDAQ:CELH), reiterating a Buy rating and a $51.00 price target. The firm's optimism is based on anticipated improvements in convenience store sales for the year 2025, especially within the energy drink category, which is a significant contributor to overall convenience store sales.
During the National Association of Convenience Stores tradeshow, Stifel gathered insights from brand owners and retailers indicating a shift towards a more positive sales trend in convenience stores. This comes after a period of declining growth rates in the energy drink sector, which saw growth slow to approximately 1% in the second and third quarters of 2024, down from around 12% growth between 2021 and the first quarter of 2024.
The firm acknowledges that recent sales trends have been affected by weather patterns in the Southeast U.S. However, they expect a general uptick in sales, driven by easier year-over-year comparisons, continuous innovation, and strategic pricing decisions. Stifel also points to increasing per-capita consumption of energy drinks, underlined by the volume growth of the category, which has outpaced most other ready-to-drink (RTD) beverage segments.
The bullish stance is further supported by a U.S. consumer survey, which suggests a steady rise in the volume of energy drink consumption. This trend is expected to contribute positively to the performance of Celsius Holdings and the broader convenience store category moving forward.
In other recent news, Celsius Holdings has seen a series of significant developments. The company reported a 23% increase in total revenue, hitting a record $402 million, and a 30% rise in international revenue to $19.6 million. However, inventory reductions by PepsiCo (NASDAQ:PEP) are projected to substantially affect Celsius Holdings' sales and EBITDA for the third quarter and full year of 2024.
Several financial firms, including Jefferies, Roth/MKM, and Piper Sandler, have revised their price targets and revenue estimates for the company. Jefferies reduced its price target to $48, citing slowing growth and promotional pressures, but maintained a Buy rating. Roth/MKM lowered its price target to $43 due to concerns over inventory and promotional impacts, while Piper Sandler confirmed its Overweight rating but reduced the price target from $50 to $47.
In addition to these financial adjustments, Celsius Holdings has experienced significant board changes. Hans Melotte, an experienced executive from Starbucks (NASDAQ:SBUX) and Johnson & Johnson, has joined the board following Jim Lee's resignation. These are the recent developments for Celsius Holdings as it navigates the financial landscape amidst industry challenges.
InvestingPro Insights
Complementing Stifel's optimistic outlook on Celsius Holdings (NASDAQ:CELH), recent data from InvestingPro offers additional context to the company's financial performance and market position. Despite the recent challenges in the energy drink sector, Celsius has demonstrated impressive revenue growth of 56.5% over the last twelve months as of Q2 2024, with quarterly revenue growth of 23.35% in Q2 2024. This aligns with Stifel's expectations of improved sales trends in the convenience store channel.
InvestingPro Tips highlight that Celsius is trading at a low P/E ratio relative to its near-term earnings growth, with a PEG ratio of 0.11 as of Q2 2024. This suggests that the stock may be undervalued considering its growth prospects, which could be of interest to investors looking at the anticipated improvements in convenience store sales for 2025.
However, it's worth noting that the stock has experienced significant volatility, with a 46.39% price decline over the past three months. This volatility, combined with the company's strong financial position—holding more cash than debt on its balance sheet—presents a complex picture for potential investors.
For those seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for Celsius Holdings, providing a deeper understanding of the company's financial health and market position.
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