On Tuesday, Morgan Stanley (NYSE:MS) maintained its Equalweight rating and $75.00 price target for Celsius Holdings (NASDAQ:CELH), a player in the energy drink market. The firm noted that although year-over-year sales growth for Celsius has slowed down recently, it remained stable when looking at a two-year span for the last two weeks ending May 18, 2024.
Despite a slight sequential decline in market share from 10.8% to 10.5%, excluding powders, Celsius's presence is stronger in other services, including sales through Costco (NASDAQ:COST) and Amazon (NASDAQ:AMZN).
The company saw an increase in sales promotions over the past three weeks, which coincided with a 7% year-over-year decline in pricing for the most recent two weeks. Additionally, product movement, or velocity, was reported to have decreased by 4% year-over-year in the latest week and by 1% over the last four weeks. Nonetheless, the two-year average velocity growth remains high-single-digit, indicating robust growth from the previous year.
Morgan Stanley's position reflects a balanced view of Celsius's prospects, acknowledging the potential for expansion in the U.S. market through increased items per store, improved placements in coolers, and growth in non-tracked channels.
However, the firm also cautions about the challenging comparable figures Celsius will face in the upcoming quarters as it cycles through the distribution and velocity gains that followed the start of its distribution agreement with PepsiCo (NASDAQ:PEP). The analysis concludes that the risk/reward profile for Celsius Holdings is balanced at this time, following the stock's recent performance.
InvestingPro Insights
As Celsius Holdings (NASDAQ:CELH) navigates the competitive energy drink landscape, real-time data from InvestingPro provides a deeper financial perspective on the company's current standing. With a substantial market capitalization of $22.18 billion and a high P/E ratio of 101.89, Celsius demonstrates significant investor confidence, albeit coupled with expectations of robust future earnings. The company's impressive revenue growth over the last twelve months, at 81.22%, underscores its strong market performance and potential for continued expansion.
InvestingPro Tips for Celsius reveal that the company holds more cash than debt, which is a reassuring sign of financial health and operational flexibility. Analysts also anticipate sales growth in the current year, reinforcing the positive outlook. However, it's worth noting that 5 analysts have revised their earnings downwards for the upcoming period, which could suggest some caution is warranted. Investors interested in a comprehensive analysis will find additional insights, with 19 more tips available on InvestingPro, which can be accessed using the coupon code PRONEWS24 for an extra 10% off a yearly or biyearly Pro and Pro+ subscription.
Despite recent volatility, with a 1-month price return of 30.06% and a strong 1-year price return of 125.76%, Celsius's stock price movements indicate a high level of market enthusiasm. These metrics, coupled with the company's solid financials, make it a noteworthy consideration for investors looking to tap into the energy drink sector's growth potential.
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