Piper Sandler analysts started Celsius Holdings Inc (NASDAQ:CELH) with an Overweight rating and a $110 per share price target in a note to clients on Wednesday.
The analysts told investors that the firm believes the company has a "differentiated brand and product in the energy drink space and can continue to drive sustainable, volume-driven share gains."
The analysts explained that CELH "offers a more refreshing alternative to coffee with a strong caffeine boost but without the sugar of most energy drinks."
In addition, they believe the company's PepsiCo Inc (NASDAQ:PEP) distribution deal will "drive near-term (US-focused) and long-term (international-focused) gains."
"PEP acquired 8.5% of CELH for $550M in 2022 and became its primary US distribution partner and its preferred international partner," the analysts explained. "CELH is now in over 210,000 US stores, up ~20% from 3Q22, with additional upside planned in 2023. Joining the PEP system has already lifted CELH's ACV to ~95%, and we expect a broader offering per store to drive gains going forward."
"US growth is CELH's key focus, but international expansion (~5% of sales now) is a sustainable, longer-term growth opportunity that we do not believe is factored into current estimates or valuation."