Stifel Adjusts Outlook on Celsius Holdings Inc.
On Tuesday, Stifel, a full-service brokerage and investment banking firm, adjusted its outlook on Celsius Holdings Inc., a global company specializing in the fitness drink category. The firm reduced the price target on the company's shares to $61.00, a decrease from the previous target of $65.00, while reiterating a Buy rating on the stock.
Future Sales and EBITDA Projections
The revision in the price target comes amid a reassessment of the company's future sales and adjusted EBITDA projections for the years 2024-2025. The change reflects a reversal of the sales benefits Celsius experienced in the third quarter of 2023 and a continuation of moderating sales trends in the United States, as observed in scanner data-tracked channels.
Stifel notes that the lowered adjusted EBITDA also considers an uptick in spending during the second half of 2024, partly due to promotional and media activities being delayed until the completion of shelf space resets. These resets were finalized later in the first half of 2024 than initially expected.
Optimism Despite Adjustments
Despite the adjustments, Stifel remains cautiously optimistic about Celsius Holdings' prospects. The firm believes that the increased spending will enhance brand awareness and could contribute to an acceleration in sales growth, velocity, and market share. These factors are considered crucial determinants of the share price progression relative to current levels.
The analysis also highlights that the current share price of Celsius Holdings implies a significant market share loss. This is based on an implied market share of approximately 7.8%, contrasted with a year-to-date share of 11.9% and a share of 11.7% in the last four weeks of data. Stifel suggests that any stabilization or improvement in market share trends could be a meaningful positive for the company's stock.
Recent Performance and Analyst Ratings
In other recent news, Celsius Holdings reported second-quarter earnings per share (EPS) of $0.28, marking a 65% increase from the same quarter last year. The company's net sales for the quarter increased by 23% to $402 million. CFRA upgraded Celsius Holdings from Hold to Buy, adjusting the price target to $55. The firm maintains its earnings per share estimates for Celsius Holdings at $1.10 for 2024 and $1.50 for 2025.
Meanwhile, Jefferies lowered Celsius Holdings' price target to $68 but maintained a Buy rating. Roth/MKM also reduced its price target to $75 due to a broader slowdown in the energy drink sector, yet retained a Buy rating. Morgan Stanley reaffirmed its Equalweight rating on Celsius shares, with a steady price target of $68.00. Truist Securities initiated coverage on Celsius with a Hold rating and a price target of $60, predicting a year-over-year revenue increase of 24.3% to $1.638 billion in FY24.
Key Financial Metrics and Market Sentiment
As investors digest the recent price target adjustment by Stifel on Celsius Holdings Inc., it's important to consider key financial metrics and market sentiment. With a market capitalization of approximately $9.43 billion, Celsius Holdings is trading at a P/E ratio of 43.73, reflecting expectations for future earnings growth. This is supported by the company's robust revenue growth over the last twelve months, with an impressive 81.22% increase, signaling strong market demand for its fitness drinks.
Analysts expect sales growth to continue this year, which aligns with Stifel's outlook for an uptick in spending to drive brand awareness and sales acceleration. Notably, the company's stock is considered to be in oversold territory based on the Relative Strength Index (RSI), which could indicate a potential rebound if market sentiment shifts positively. Additionally, with liquid assets exceeding short-term obligations, Celsius Holdings maintains a strong liquidity position, which is an essential factor for sustaining its operations and growth initiatives.
