On Tuesday, Piper Sandler confirmed its Overweight rating on shares of Celsius Holdings (NASDAQ:CELH) but reduced the price target from $50 to $47. The adjustment comes in response to an anticipated increase in promotional discounting and a slowdown in US retail trends. The financial services firm has revised its sales estimates for Celsius Holdings, citing a more cautious outlook for the near future.
The firm has updated its model to account for the impact of promotional discounting on retail sales as inventories are drawn down. This change reflects a more conservative stance on the company's sales growth. The updated model also includes an assessment of distributor inventory levels, which Piper Sandler believes have now reached appropriate levels.
As a result of these revisions, the 2024 sales estimate for Celsius Holdings has been lowered from approximately $1,440 million to around $1,385 million. This reflects adjustments to the third quarter of 2024 promotional discount levels. Furthermore, the 2025 sales estimate has been decreased from approximately $1,735 million to about $1,610 million, indicating modestly slower growth expectations.
The new stock price target of $47, although lower than the previous target, still implies a valuation of approximately 6 times the 2025 estimated enterprise value to sales ratio. Piper Sandler's reiteration of the Overweight rating suggests that despite the revised sales estimates and price target, the firm remains positive on the stock's potential.
Investors will be watching Celsius Holdings' performance closely in light of these updates, as the company navigates the shifting retail landscape and inventory adjustments.
In other recent news, Celsius Holdings has seen notable shifts in its board and financial projections. The company has appointed Hans Melotte to its board, following the resignation of Jim Lee, a designee of PepsiCo (NASDAQ:PEP). Melotte, a seasoned executive with experience at Starbucks (NASDAQ:SBUX) and Johnson & Johnson, is expected to bring significant expertise to the board.
Simultaneously, Celsius Holdings is grappling with financial adjustments due to inventory reductions by PepsiCo. These reductions are projected to impact the company's sales and EBITDA for the third quarter and the full year of 2024. Consequently, several financial firms, including Truist Securities, Jefferies, Roth/MKM, and BofA Securities, have revised their revenue and EBITDA estimates for Celsius Holdings.
Despite these adjustments, the company reported a 23% increase in total revenue, reaching a record $402 million, and a 30% rise in international revenue to $19.6 million. Exane BNP Paribas (OTC:BNPQY) has maintained its Outperform rating for Celsius Holdings, while Truist Securities has adjusted their price targets. These are the recent developments for Celsius Holdings.
InvestingPro Insights
In light of Piper Sandler's revised outlook for Celsius Holdings, it's worth noting some additional insights from InvestingPro. With a market capitalization of $7.64 billion and a robust revenue growth of 56.5% over the last twelve months as of Q2 2024, Celsius Holdings is demonstrating significant expansion in its financial metrics. The company's P/E ratio stands at 32.01, which is relatively low compared to its near-term earnings growth, suggesting a potentially attractive valuation for investors considering the company's growth prospects.
InvestingPro Tips highlight that Celsius Holdings holds more cash than debt on its balance sheet, providing a level of financial stability. Moreover, the company's liquid assets exceed its short-term obligations, further indicating a solid financial position.
While three analysts have revised their earnings downwards for the upcoming period, it's also important to note that analysts predict the company will be profitable this year. For investors seeking more detailed analysis, there are 16 additional InvestingPro Tips available for Celsius Holdings at https://www.investing.com/pro/CELH.
The stock's recent performance has shown volatility, trading near its 52-week low and experiencing a significant price drop over the last three months. This information may be particularly relevant for investors considering entry points or assessing the stock's risk profile. The InvestingPro Fair Value estimate of $44.23 suggests a potential undervaluation compared to the analyst target of $50, which could be of interest to value-focused investors.
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