BofA Securities has adjusted its outlook on Celsius Holdings (NASDAQ: NASDAQ:CELH), decreasing the price target to $26.00 from the previous $32.00.
The firm maintained its Underperform rating on the stock. The adjustment follows the company's announcement of an expected inventory drag in the third quarter of 2024, with estimates ranging between $100 million and $120 million.
The situation is attributed to Pepsi's more efficient inventory management practices within a slowing product category.
Celsius Holdings' management has identified macroeconomic challenges as a contributing factor, including a 4% decrease in foot traffic at a significant convenience retailer.
However, the underlying concern seems to be rooted in consumer demand. Retail consumption data suggests that year-over-year sales could start to decline by the end of the third quarter.
In other recent news, Celsius Holdings reported a 23% increase in total revenue, setting a record at $402 million, with a 30% rise in international revenue to $19.6 million.
Despite industry challenges, Celsius maintained its category growth leadership and expanded its shelf presence. Meanwhile, Zevia PBC announced the appointment of Alexandre Ruberti to its Board of Directors, a move expected to significantly contribute to the company's growth and profitability.
In the analyst's corner, Morgan Stanley maintained its Equalweight rating and $50.00 stock price target for Celsius Holdings due to concerns about growth. TD Cowen followed suit, revising its price target for Celsius's shares from $68.00 to $50.00, while maintaining a Buy rating. The firm's revised projection for Celsius's 2024 sales growth stands at 19%, reflecting concerns about broader weakness in the Energy category consumption and increased promotional activities by competitors.
InvestingPro Insights
As Celsius Holdings (NASDAQ:CELH) grapples with inventory management and fluctuating consumer demand, real-time data and insights from InvestingPro provide a broader context for investors. With a market capitalization of $7.55 billion, the company's current P/E ratio stands at 31.23, reflecting investor expectations for future earnings. Despite the recent price target adjustment by BofA Securities, InvestingPro Tips indicate that Celsius Holdings holds more cash than debt on its balance sheet, which may offer some financial flexibility in these challenging times.
Additional InvestingPro Data highlights a robust revenue growth of 56.5% over the last twelve months as of Q2 2024, with gross profit margins maintaining a strong 50.45%. This suggests that while the company faces headwinds, it has demonstrated the ability to generate significant sales and maintain profitability on its products. Furthermore, the stock's price has experienced volatility, currently trading near its 52-week low, which may present an opportunity for investors seeking entry points in anticipation of a potential rebound.
For those considering an investment in Celsius Holdings, it's worth noting that the InvestingPro platform offers 20 additional tips, providing a comprehensive analysis that could guide investment decisions. The full suite of tips, including those not mentioned here, can be explored at InvestingPro.
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