On Tuesday, Morgan Stanley (NYSE:MS) maintained its Equalweight rating on shares of Celsius Holdings (NASDAQ:CELH), along with a steady price target of $46.00. According to InvestingPro data, analyst targets for CELH range from $26 to $62, with the stock currently trading at $30.56. The company maintains a "GREAT" Financial Health Score of 3.36 out of 5, supported by strong liquidity and minimal debt.
The firm observed a slight deceleration in the company's year-over-year sales growth for the last four weeks (L4W) ending November 30, 2024. Sales increased by 5.7% in the Nielsen xAOC+C channels during the L4W compared to a 6.2% rise in the preceding four weeks, with the data affected by the timing of Thanksgiving. This recent slowdown contrasts with the company's impressive revenue CAGR of 90% over the past five years, as revealed by InvestingPro analysis.
Celsius's market share, excluding powders, experienced a modest sequential drop of approximately 20 basis points to 8.9% for the L4W. This also represents a year-over-year decline of 10 basis points.
The company's total distribution points (TDP) growth remained consistent, staying in the low 30% range year-over-year, while velocity, which measures the rate of product sales, continued to show a low 20% decline year-over-year.
The report highlighted that Celsius's sales and market share trends in Nielsen's Full View Measurement data set, which includes estimated sales from Amazon (NASDAQ:AMZN)'s first-party platform, mirrored those seen in other data services, even though Celsius's implied share on Amazon appeared lower.
Morgan Stanley's stance on Celsius Holdings remains unchanged, citing an improved risk/return profile following a significant stock price decline of approximately 70% from the early 2024 highs.
InvestingPro subscribers can access 15 additional investment tips and a comprehensive Pro Research Report, which provides detailed analysis of CELH's valuation metrics, including its current P/E ratio of 42.24 and strong gross profit margin of nearly 50%. However, the firm noted that it does not anticipate a catalyst for the stock until there is a positive inflection in the company's scanner data trends.
While there is potential for market share growth over time, the firm also recognized the risk of market share stagnation or decline in the short term due to increasing competition. This includes the launch of new products by competitors, such as Red Bull's Winter Edition Iced Vanilla Berry in both regular and sugar-free varieties, and Monster's Ultra Vice Guava.
In other recent news, Celsius Holdings Inc. reported a significant decrease in its third-quarter revenue for 2024, falling 31% to $265.7 million from $385 million in the same quarter last year. Despite this, the company remains optimistic about future growth.
The decrease was largely attributed to a $124 million impact from distributor inventory optimization, yet year-to-date revenue still showed a 5% increase. The company also reported a sharp decline in net income to $6.4 million, down 92% from the previous year's $83.9 million.
Further, analysts at Needham initiated coverage on Celsius Holdings, bestowing a buy rating and setting a price target of $38. They forecast brighter prospects for the company looking ahead to 2025, citing its position as the third player in the energy drink sector. The analysts highlighted a positive outlook for Celsius Holdings, despite a recent slowdown in consumer takeaway trends.
These are recent developments for the company, which maintains a strong cash position with over $900 million in reserves and plans to drive growth through promotional activities and new product launches into 2025. It's worth noting that Needham's addition of Celsius Holdings to their conviction list implies a strong belief in the company's ability to recover and grow in the near future.
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