On Thursday, JPMorgan (NYSE:JPM) initiated coverage on shares of Celsius Holdings (NASDAQ: NASDAQ:CELH), assigning an Overweight rating to the stock along with a price target of $37.00. The firm's analysis highlights a favorable view of the company due to improving category trends and the stock's current valuation, which is significantly lower than its historical peak.
According to InvestingPro data, the stock currently trades at $29.76, with analyst targets ranging from $26 to $62, suggesting significant potential upside.
Celsius Holdings, known for its energy drinks, has been recognized as the third-largest brand in the U.S. energy drink market. The company's products align with several key consumer trends, including health and wellness, functionality, zero sugar content, and premium product offerings.
These trends are seen as drivers for the company's potential growth. InvestingPro analysis shows the company maintains strong financial health with a 'GREAT' overall score and impressive gross margins of nearly 50%.
The JPMorgan analyst noted that despite a slowdown in the overall energy drink category in the U.S., the underlying secular trends do not detract from Celsius Holdings' growth prospects. The company is expected to maintain a strong position and deliver top-tier growth within the consumer staples sector.
This outlook is supported by the company's robust revenue growth of 19.4% over the last twelve months and strong balance sheet, with more cash than debt, as revealed by InvestingPro's detailed financial analysis.
The stock's current trading level, which is approximately one-third of its peak value of $96 in March 2024, was also mentioned as a factor for initiating coverage with a positive outlook. This valuation suggests that the stock may have room for growth as the company continues to capitalize on the identified consumer megatrends.
While trading at high earnings and EBITDA multiples, InvestingPro's Fair Value analysis indicates the stock is currently undervalued, with 14 additional ProTips available to subscribers providing deeper insights into the company's valuation metrics and growth potential.
The analyst's commentary emphasizes the company's strategic positioning and the potential for Celsius Holdings to achieve consistent growth despite broader category deceleration. The Overweight rating and price target reflect a confidence in the company's future performance within the marketplace.
In other recent news, Celsius Holdings reported a significant decrease in third-quarter revenue for 2024, falling 31% to $265.7 million from $385 million in the same quarter last year. The company also reported a sharp decline in net income to $6.4 million, down 92% from the previous year's $83.9 million.
Despite these results, analysts from Needham initiated coverage on Celsius Holdings, bestowing a buy rating and setting a price target of $38. They forecast brighter prospects for the company looking ahead to 2025, citing its position as the third player in the energy drink sector.
Morgan Stanley (NYSE:MS) maintained its Equalweight rating on shares of Celsius Holdings, observing a slight deceleration in the company's year-over-year sales growth for the last four weeks. However, the firm's stance on Celsius Holdings remains unchanged, citing an improved risk/return profile.
The company's total distribution points (TDP) growth remained consistent, while velocity, which measures the rate of product sales, continued to show a decline year-over-year.
These are recent developments for the company, which maintains a strong cash position with over $900 million in reserves and plans to drive growth through promotional activities and new product launches into 2025.
It's worth noting that Needham's addition of Celsius Holdings to their conviction list implies a strong belief in the company's ability to recover and grow in the near future. Despite facing several headwinds, the company's management remains committed to its growth strategy.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.