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On Friday, TD Cowen adjusted its outlook on Celsius Holdings (NASDAQ:CELH), increasing the price target to $30.00 from $29.00, while maintaining a Hold rating on the shares. The adjustment follows Celsius Holdings’ fourth-quarter earnings beat and the announcement of its $1.8 billion acquisition of Alani Nu. With analyst targets ranging from $26 to $62 according to InvestingPro data, the transaction is anticipated to be finalized in the second quarter of 2025.
The acquisition of Alani Nu positions Celsius as a robust third contender in the energy drink market, commanding an approximate 16% category share. With current revenue of $1.36 billion and a strong financial health score from InvestingPro, analysts at TD Cowen have acknowledged the strategic move, noting the deal’s potential to enhance the company’s cash earnings per share (EPS) in the first full year following completion.
TD Cowen’s analysts expressed a degree of caution, suggesting that Celsius management might have expedited the deal to counterbalance a slowdown in the company’s principal operations. Despite this concern, the firm’s revised price target reflects a slightly more optimistic valuation of Celsius Holdings’ stock, which currently maintains a healthy balance sheet with more cash than debt and a strong current ratio of 3.62.
The energy drink sector has been witnessing consolidation, with companies like Celsius Holdings actively seeking acquisitions to bolster their market presence. The Alani Nu acquisition represents a significant step for Celsius in expanding its product portfolio and market share.
As the deal awaits closure in the coming months, investors and market watchers will likely monitor the integration of Alani Nu into Celsius Holdings and the subsequent financial performance of the combined entity. The market’s reception to these developments will be reflected in the trading of Celsius Holdings’ stock on the NASDAQ.
In other recent news, Celsius Holdings announced its acquisition of Alani Nu for a net purchase price of $1.65 billion, factoring in $150 million in tax savings. The acquisition comes on the heels of Celsius’s fourth-quarter earnings, which slightly exceeded expectations. Analysts from Morgan Stanley (NYSE:MS), Truist Securities, Jefferies, JPMorgan, and Stifel have weighed in on these developments with varying outlooks. Morgan Stanley maintained an Equalweight rating with a $42 target, expressing caution about medium-term prospects due to customer overlap and declining retail sales. Truist Securities reiterated a Hold rating and a $35 target, citing concerns about the maturity of the energy drink market. Jefferies reaffirmed a Buy rating with a $33 target, viewing the acquisition as a strategic move that could enhance growth. JPMorgan maintained an Overweight rating with a $31 target, highlighting expected cost synergies and positive cash EPS impact from the acquisition. Stifel also reiterated a Buy rating with a $37 target, noting the potential for increased sales and EBITDA post-acquisition, although they emphasized the importance of improving core sales and market share trends for long-term success.
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