On Wednesday, Stifel financial firm adjusted its outlook on Celsius Holdings (NASDAQ:CELH) shares, reducing the price target to $85 from the previous $95, yet reaffirmed a Buy rating on the stock.
The revision follows an announcement made at an investor conference where Celsius Holdings indicated that PepsiCo (NASDAQ:PEP) has decreased its inventory levels by an additional $20 million to $30 million in the second quarter of 2024.
The company's inventory levels, which have been managed by Pepsi since the third quarter of 2022, are believed to be approaching a balance between supply and sales, suggesting that significant further reductions are not anticipated.
Despite the inventory cutback, Celsius Holdings reported that depletion rates from the Pepsi distribution system saw a mid-teens percentage increase sequentially from the first quarter of 2024.
This implies second-quarter sales of approximately $400 million, representing year-over-year growth of about 23%, or roughly 31% excluding the impact of the inventory reduction.
Stifel's updated price target of $85 is based on 36 times the projected 2025 earnings before interest, taxes, depreciation, and amortization (EBITDA), adjusted for the company.
The firm's decision to maintain a Buy rating is underpinned by the belief that end-demand for Celsius products remains robust. Sales growth is expected to exceed 20% annually through 2025, which should enable the company to continue expanding its market share.
Scanner data-tracked channels have shown weakening sales trends, which factored into Stifel's revised estimates for the company's performance in the coming years. Despite these adjustments, the firm's outlook for the company remains positive, with the anticipation of sustained demand driving continued growth and market share acquisition for Celsius Holdings.
In other recent news, Celsius Holdings Inc. reported a significant 37% year-over-year revenue increase for the first quarter of 2024, reaching a new high of $355.7 million. CFRA initiated coverage on shares of Celsius Holdings with a Hold rating and a price target set at $65.00, indicating the company's emergence as a significant competitor in the energy drinks sector. Meanwhile, Piper Sandler maintained an Overweight rating for the company, highlighting the potential for ongoing, volume-driven market growth.
BofA Securities updated its outlook on Celsius Holdings, increasing the stock's price target to $84 from $80 and adjusting its sales forecast from $385 million to $390 million.
Morgan Stanley (NYSE:MS) maintained its Equalweight rating and $75.00 price target for the company, acknowledging potential for expansion in the U.S. market. UBS adjusted the price target for Celsius Holdings shares to $92.00 from the previous target of $99.00, maintaining a Buy rating on the stock.
The company reported first-quarter 2024 adjusted earnings per share (EPS) of $0.27, surpassing consensus estimates. Despite some inventory challenges, the company continues to expand its product range and distribution footprint, including plans for international expansion. These are the recent developments for Celsius Holdings Inc.
InvestingPro Insights
As Celsius Holdings (NASDAQ:CELH) navigates the fluctuations in inventory levels and partnerships, recent data from InvestingPro provides a deeper financial perspective. With a market capitalization of $15.34 billion and a striking revenue growth of 81.22% in the last twelve months as of Q1 2024, Celsius Holdings demonstrates a robust expansion in its financials. The company's P/E ratio stands at 70.74, which, when paired with a PEG ratio of 0.33 for the same period, suggests that investors are optimistic about future earnings growth relative to the current earnings multiple.
InvestingPro Tips highlight several key aspects of the company's financial health and market performance. Notably, Celsius Holdings holds more cash than debt on its balance sheet, indicating solid liquidity. Additionally, analysts anticipate sales growth in the current year, reinforcing the positive outlook shared by Stifel. On the flip side, the stock has experienced significant volatility, with a one-week price total return showing an 11.5% decline. However, it's worth noting that the company's stock price has seen a large uptick over the last six months, with a return of 33.97%.
For investors seeking comprehensive analysis and additional insights, InvestingPro offers more tips on Celsius Holdings, which can be accessed at https://www.investing.com/pro/CELH. To enrich your investment strategy with these insights, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. With 19 additional InvestingPro Tips available, investors can gain a more nuanced understanding of Celsius Holdings' market position and financial trajectory.
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