On Wednesday, TD Cowen adjusted its stance on Celsius Holdings (NASDAQ:CELH), moving the beverage company's stock rating from 'Buy' to 'Hold.' The firm also revised its price target downward to $29.00 from the previous $40.00. Currently trading at $26.81, the stock has experienced significant volatility, with InvestingPro data showing a 44.31% decline over the past six months. The revision follows an observed deceleration in the company's sales growth, based on recent retail tracking data.
The latest figures show that Celsius Holdings experienced a mere 0.3% increase in sales over the last four weeks ending January 11. While the company maintains strong fundamentals with a 19.36% revenue growth over the last twelve months, this recent slowdown in growth prompted the reassessment by TD Cowen, as concerns arise about the potential for the company's valuation multiple to shrink further, particularly if it enters a period of stagnant growth, commonly referred to as "ex-growth."
TD Cowen's analysis suggests that the competitive landscape is intensifying, which poses additional risks for Celsius Holdings. The firm's cautionary stance reflects the possibility that increased competition could impact the company's market share and future growth prospects.
Celsius Holdings' stock has already been trading below its previous highs, and the latest report from TD Cowen indicates that investor sentiment may be shifting. The reduction in the price target to $29.00 from $40.00 is a significant adjustment and may influence market activity surrounding the shares of Celsius Holdings.
The concerns raised by TD Cowen highlight the challenges faced by companies in the beverage sector, where competition can rapidly alter market dynamics. Celsius Holdings will likely continue to be monitored closely by investors as they assess the company's performance and potential in the context of the broader industry.
According to InvestingPro, the company maintains a "GREAT" financial health score, with analyst price targets ranging from $26 to $62. Subscribers can access 15 additional ProTips and a comprehensive Pro Research Report for deeper insights into CELH's valuation and growth prospects.
In other recent news, Celsius Holdings reported a significant decrease in third-quarter revenue for 2024, falling 31% to $265.7 million from $385 million in the same quarter last year.
The company's net income also sharply declined to $6.4 million, down 92% from the previous year's $83.9 million. In response to these figures, Stifel maintained a Buy rating for Celsius, while Needham initiated coverage with a Buy rating and a price target of $38.
Morgan Stanley (NYSE:MS) maintained an Equalweight rating but lowered its target for the company to $42, reflecting a dip in market share and a more conservative outlook on future earnings. Deutsche Bank (ETR:DBKGn) initiated coverage with a Hold rating, citing potential for a rebound in the energy drink sector by 2025. Meanwhile, JPMorgan initiated coverage with an Overweight rating due to improving category trends.
In recent developments, Celsius management has outlined a series of marketing and innovation strategies intended to reverse the trend of declining sales velocities. The company expressed expectations for improved sales velocities in 2025, with plans to adjust its media mix to better target key demographics and increase purchase frequency. Additionally, the company anticipates an increase in shelf space in 2025, which could potentially bolster its market presence and consumer accessibility.
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