On Monday, Jefferies adjusted its outlook on Celsius Holdings (NASDAQ:CELH), lowering the beverage company's price target to $68 from the previous $98 while retaining a Buy rating on the stock. The adjustment follows a noted decline in the company's shares, which have fallen 14% year-to-date, a drop that mirrors a similar decline in the broader market, with the Consumer Staples Select Sector SPDR Fund (XLP) also down by 10% in the same period.
The analyst from Jefferies expressed that although a slowdown in business was anticipated after years of rapid growth since 2020, the quick deceleration was unexpected. Additionally, the overall category's growth has slowed to 2.6%, with Monster Beverage Corporation's (NASDAQ:MNST) shares also experiencing a 14% decrease.
In response to the changing market conditions, Jefferies has revised its revenue growth forecast for Celsius Holdings for 2024 down to 20%, a decrease of 860 basis points. However, this tempered expectation is somewhat balanced by the anticipation of expanding EBITDA margins in the future.
The revised valuation by Jefferies implies that Celsius Holdings could achieve approximately 15% market share in the United States. Despite the reduced price target and the current market performance, Jefferies remains optimistic about Celsius Holdings' long-term prospects and continues to recommend a Buy rating, with the new price target set at $68.
In other recent news, Celsius Holdings has been a subject of multiple analyst revisions. Roth/MKM lowered its price target for the company to $75, citing a slowdown in the energy drink sector, but maintained a Buy rating. Concurrently, Morgan Stanley reaffirmed its Equalweight rating on Celsius shares, with a steady price target of $68.00, despite observing a deceleration in the company's sales growth and a decrease in market share.
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. Maxim Group, while maintaining a Buy rating, lowered its price target for Celsius due to inventory reductions by PepsiCo (NASDAQ:PEP) and a slight decline in several of the company's performance metrics.
InvestingPro Insights
In light of Jefferies' revised outlook on Celsius Holdings (NASDAQ:CELH), current real-time data from InvestingPro provides additional context for potential investors. With a market capitalization of approximately $11.13 billion and a high P/E ratio of 50.48, CELH's valuation reflects significant growth expectations. The company's robust revenue growth rate, which stands at 81.22% for the last twelve months as of Q1 2024, underscores the rapid expansion that has characterized Celsius Holdings in recent years. Moreover, the company's gross profit margin of nearly 50% indicates a strong ability to convert sales into profit.
InvestingPro Tips suggest that CELH holds more cash than debt on its balance sheet, which provides financial flexibility and could be a reassuring sign for investors concerned with the company's ability to navigate uncertain market conditions. Additionally, analysts anticipate sales growth in the current year, which could indicate continued market penetration and consumer demand for Celsius's products. It's worth noting that there are 19 additional tips available on InvestingPro that can provide deeper insights into the company's financial health and stock performance.
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