On Tuesday, Truist Securities launched coverage on shares of Celsius Holdings (NASDAQ:CELH) with a Hold rating and a price target of $60. The firm highlighted the potential for the company to achieve significant growth over the next three-plus years due to factors such as expanded distribution, accelerated product movement, and growing household recognition.
Celsius Holdings, known for its functional energy drinks and drink-mix powders, operates primarily in North America and has a presence in Europe and Asia. Truist Securities outlined projections for the company's revenue and EBITDA, predicting a year-over-year increase of 24.3% to $1.638 billion in FY24, followed by growth to $1.926 billion and $2.224 billion for FY25 and FY26, respectively.
The firm's initial EBITDA estimates for Celsius Holdings stand at $389.7 million for FY24, which aligns with the consensus. Expectations rise to $504.0 million for FY25 and $588.5 million for FY26. However, Truist noted that their overall estimates are below the consensus, except for the FY24 EBITDA figure.
The Hold rating, according to Truist Securities, reflects a cautious stance due to several factors. These include the view that market expectations may exceed the company's current performance capabilities, the anticipated difficulties in gaining additional market share, the need for distribution partnerships to strengthen, and the necessity for investor sentiment towards energy drink stocks to become more stable.
Truist Securities did not provide specific details about management's guidance, as the company does not issue such guidance. The price target and forecasts set by Truist Securities aim to reflect the firm's conservative outlook on the stock's near-term performance.
In other recent news, Celsius Holdings has been experiencing significant adjustments in its stock targets by various financial firms due to inventory reductions by PepsiCo (NASDAQ:PEP), its main distributor. Celsius reported a substantial 37% year-over-year revenue increase for the first quarter of 2024, reaching a new high of $355.7 million. Despite these reductions, the company's second-quarter sales are estimated at approximately $400 million, representing about 23% growth year-over-year.
Firms like Maxim Group, Roth/MKM, and TD Cowen have reduced their price targets for Celsius, citing the inventory reductions as a factor. However, they maintain a positive outlook, keeping their Buy ratings. Piper Sandler also maintains an Overweight rating, emphasizing the company's potential for sustained sales 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 a $75.00 price target. These recent developments reflect a mixed bag of analyst evaluations and performance metrics for Celsius Holdings.
InvestingPro Insights
InvestingPro data indicates that Celsius Holdings (NASDAQ:CELH) boasts a robust market capitalization of $13.93 billion, signaling strong investor confidence in the company's market position. Despite a high Price/Earnings (P/E) ratio of 64.7, the company's PEG ratio, which measures the P/E relative to earnings growth, is notably low at 0.3 for the last twelve months as of Q1 2024. This suggests that investors may be expecting substantial earnings growth relative to the stock's P/E ratio. Additionally, Celsius Holdings has experienced a significant revenue growth of 81.22% over the same period, reflecting the company's expanding market reach and the success of its functional energy drinks.
Two InvestingPro Tips for CELH are particularly relevant in light of Truist Securities' analysis. First, with analysts anticipating sales growth in the current year, this aligns with the firm's projections for revenue expansion. Second, the fact that CELH holds more cash than debt on its balance sheet provides financial stability and flexibility, which could be crucial as the company seeks to capture more market share and expand its distribution networks. For those looking to delve deeper into Celsius Holdings' financials, InvestingPro offers additional tips and insights. Discover more expert analysis and tips on CELH by visiting InvestingPro, and don't forget to use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
Investors should note that while the stock has exhibited volatility with a price decline over the last month, the long-term return has been strong, with a high return over the last decade. There are 17 additional InvestingPro Tips available that can provide further guidance on whether CELH is a suitable addition to your investment portfolio.
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