On Monday, Roth/MKM maintained its Buy rating on Celsius Holdings (NASDAQ:CELH) stock but lowered the shares target from $96 to $87. The adjustment follows a period of significant volatility for the beverage company's stock, which saw its value swing from around $60 in mid-April to $96 in late May, before falling back to approximately $60.
The firm pointed to a reduction in second-quarter revenue projections due to additional inventory contractions by PepsiCo (NASDAQ:PEP), which is expected to affect Celsius' earnings. Despite the recent decline in stock value, which analysts consider an overreaction, the Buy rating remains unchanged.
The decision to reduce the price target and revenue estimates comes after Celsius management indicated earlier this year that inventory buildups within Pepsi's system had temporarily increased Celsius' shipments. This year, however, the situation has reversed, with inventory reductions at Pepsi negatively impacting Celsius' revenue in the first and second quarters.
Retail IRI scan data has also shown signs of potential deceleration in year-over-year growth, although the firm suggests caution in interpreting short-term data. The analyst cited past instances where similar fluctuations did not indicate a long-term slowdown. Nevertheless, the confirmed inventory reduction by Pepsi is expected to have a lasting effect on revenue if current supply levels are maintained.
The reassessment of the stock's value also reflects a more conservative approach to the company's revenue and EBITDA multiples, in light of perceived industry-wide sales deceleration and possible slowing growth for Celsius. The new price target of $87 takes into account these revised expectations and market conditions.
In other recent news, Celsius Holdings reported a substantial 37% year-over-year revenue increase for the first quarter of 2024, reaching a new high of $355.7 million. The company's second-quarter sales are estimated at approximately $400 million, representing about 23% growth year-over-year.
TD Cowen and Stifel financial firms reduced their price targets for Celsius shares to $85 but maintained a Buy rating. On the other hand, CFRA initiated coverage with a Hold rating and a $65 price target. Piper Sandler, maintaining an Overweight rating, emphasized the company's potential for volume-driven market growth.
BofA Securities increased the stock's price target to $84 from $80, adjusting its sales forecast from $385 million to $390 million. Morgan Stanley maintained its Equalweight rating and $75.00 price target, acknowledging potential for expansion in the U.S. market. These recent developments reflect analyst evaluations and performance metrics for Celsius Holdings.
InvestingPro Insights
As Celsius Holdings (NASDAQ:CELH) navigates through market fluctuations and inventory adjustments with PepsiCo, investors and analysts are closely monitoring the company's financial health and growth prospects. According to real-time data from InvestingPro, Celsius boasts a strong market capitalization of $13.98 billion, underscoring its substantial presence in the beverage industry. The company's impressive revenue growth over the last twelve months, clocking in at 81.22%, signals robust sales performance despite recent inventory challenges.
InvestingPro Tips highlight that Celsius is trading at a low P/E ratio relative to near-term earnings growth, suggesting potential value for investors considering the stock's earnings potential. Additionally, the company's liquid assets surpassing short-term obligations indicates financial stability, which may reassure investors concerned about the company's ability to meet its immediate financial commitments.
For those interested in a deeper dive into Celsius' financial metrics and strategic analysis, InvestingPro offers an array of additional tips. Currently, there are 17 more InvestingPro Tips available for Celsius, which can provide investors with a more comprehensive understanding of the company's financial position and future outlook. To access these insights and enhance your investment strategy, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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