Asia FX muted, dollar weakens slightly ahead of Fed rate decision
On Friday, Morgan Stanley (NYSE:MS) reaffirmed its Equalweight rating and $42.00 price target for Celsius Holdings (NASDAQ:CELH) stock. Following the company’s announcement of its intent to acquire Alani Nu for $1.65 billion, adjusted for $150 million in net present value (NPV) tax savings, Celsius shares soared by over 35% after market close on Thursday. The stock has shown significant momentum recently, posting a 14.28% gain over the past week, though it remains down 58.28% from its 52-week high of $99.62. InvestingPro analysis suggests the stock is currently undervalued, despite trading at a P/E ratio of 35.08. The acquisition news came alongside Celsius’s fourth-quarter sales report, which slightly exceeded revised expectations.
The deal to acquire Alani Nu, a competitor in the energy drink market, could potentially reignite investor interest in Celsius Holdings over the coming quarters, according to Morgan Stanley analysts. However, they expressed caution regarding the medium-term outlook due to concerns about the customer base overlap between Celsius and Alani Nu, as well as the recent decline in Celsius’s retail sales. Despite these concerns, InvestingPro data reveals the company maintains strong fundamentals with a GREAT financial health score and holds more cash than debt on its balance sheet. For deeper insights into CELH’s financial health metrics and growth potential, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers. The analysts noted that while Alani Nu’s energy drink retail sales have surged by over 70% year-to-date according to Nielsen data, Celsius’s retail sales have dropped approximately 5.5% in the same period, facing stiff competition from other brands like Red Bull and Monster, particularly in the sugar-free segment.
Morgan Stanley’s report also adjusted its standalone revenue projections for Celsius, reducing them by about 4% to account for the decline in retail sales and market share. This adjustment comes despite a slight outperformance in the fourth quarter. The analysts estimate a modest 4-6% top-line growth for Celsius in the mid-term, assuming the Celsius brand can achieve 3-5% growth and Alani Nu’s growth slows to a high single-digit rate. The company’s current revenue stands at $1.36 billion for the last twelve months, with a healthy gross profit margin of 50.18%. InvestingPro subscribers can access detailed revenue forecasts and over 15 additional ProTips for comprehensive investment analysis.
The report highlighted significant customer overlap between the Celsius and Alani Nu brands, especially among female consumers. According to Numerator panel data, there is approximately 25% household overlap between the two brands, with the overlap potentially being even higher among women due to similar lifestyle positioning. Despite Celsius Holdings downplaying this aspect, Morgan Stanley analysts believe the overlap is a notable factor to consider.
In other recent news, Celsius Holdings announced its acquisition of Alani Nu for a net purchase price of $1.65 billion, including $150 million in tax assets. The deal, expected to close in the second quarter of 2025, is anticipated to significantly enhance Celsius’s market position, with Alani Nu’s retail sales having increased by 78% year over year. Analysts from Jefferies, JPMorgan, and Stifel have maintained positive ratings on Celsius, with price targets ranging from $31 to $37, following the acquisition news. Jefferies highlighted the strategic value of the acquisition, noting Alani Nu’s impressive growth momentum.
Celsius also reported fourth-quarter earnings with earnings per share of $0.14, exceeding analyst expectations by $0.02, though revenue was slightly below consensus at $332.2 million. Despite this, the acquisition is expected to be accretive to cash EPS in the first full year post-acquisition. Meanwhile, Truist Securities reiterated a Hold rating with a $35 price target, expressing concerns over the overall energy drink market’s growth potential. The firm advised investors to remain cautious amid an increasingly competitive industry landscape. These developments reflect the evolving dynamics in the energy drink sector, as Celsius navigates new opportunities and challenges.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.