Roth/MKM has maintained its Buy rating on shares of Celsius Holdings (NASDAQ: NASDAQ:CELH), with a consistent price target of $43.00. The firm anticipates the company to announce its third-quarter results for 2024 around November 7th.
The expected report suggests a considerable drop in revenue and Adjusted EBITDA due to inventory reductions by PepsiCo (NASDAQ: NASDAQ:PEP). Despite these reductions, the analyst's outlook remains positive.
The analyst from Roth/MKM projects that the forthcoming earnings report will reflect the impact of PepsiCo's inventory management, which is likely to have affected Celsius Holdings' financial performance. The company's management is also expected to provide insights into recent category performance and discuss the introduction of new flavors that were showcased at the National Association of Convenience Stores (NACS) Show.
While Celsius Holdings does not usually provide forward guidance, the analyst anticipates that the company's commentary on short-term prospects will be cautiously optimistic. The management's discussion is likely to offer investors a glimpse into the company's expectations for the fiscal year 2025.
In other recent news, Celsius Holdings has reported a 23% increase in total revenue, achieving a record $402 million, and a 30% rise in international revenue to $19.6 million. However, the company is facing the impact of inventory reductions by PepsiCo, which are projected to significantly affect sales and EBITDA for the third quarter and full year of 2024.
In response, several financial firms, including Morgan Stanley, Piper Sandler, Jefferies, and Roth/MKM, have revised their price targets and revenue estimates. Morgan Stanley maintained its Equalweight rating on shares of Celsius with a steady target of $50.00. Piper Sandler confirmed its Overweight rating but reduced the price target from $50 to $47.
Jefferies reduced its price target to $48, and Roth/MKM lowered its price target to $43. Stifel maintains a positive outlook on Celsius, predicting an improvement in convenience store sales by 2025. Lastly, the company has seen significant board changes, with Hans Melotte, an experienced executive from Starbucks (NASDAQ:SBUX) and Johnson & Johnson, joining the board following Jim Lee's resignation.
InvestingPro Insights
As Celsius Holdings (NASDAQ: CELH) approaches its Q3 2024 earnings report, InvestingPro data provides additional context to the analyst's outlook. Despite the anticipated short-term challenges, CELH's financials show some positive indicators. The company's revenue growth stands at an impressive 56.5% over the last twelve months, with a robust gross profit margin of 50.45%. This suggests that Celsius has maintained strong sales momentum and pricing power, which could help buffer against temporary setbacks.
InvestingPro Tips highlight that Celsius holds more cash than debt on its balance sheet and has liquid assets exceeding short-term obligations. These factors could provide financial flexibility as the company navigates through inventory adjustments with PepsiCo. Additionally, CELH is trading at a low P/E ratio relative to near-term earnings growth, which may indicate potential value for investors looking beyond the current quarter.
It's worth noting that InvestingPro offers 11 additional tips for CELH, providing a more comprehensive analysis for investors considering the stock's potential. As the company prepares to face the challenges outlined in the Roth/MKM report, these insights could prove valuable for understanding Celsius Holdings' financial position and market dynamics.
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