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On Thursday, Piper Sandler adjusted its outlook on Celsius Holdings (NASDAQ:CELH), reducing the price target to $33 from the previous $47 while retaining an Overweight rating on the stock. The firm anticipates a potential increase in shipments for the company in 2025, which could lead to a growth rate of approximately 20%, despite the current slowdown in top-line momentum. The stock has experienced significant pressure, trading near its 52-week low of $25.23, down over 70% from its peak of $99.62. InvestingPro data reveals the company maintains strong financial health with a "GREAT" overall score.
The analysis by Piper Sandler suggests that while Celsius Holdings' sell-through momentum is currently soft, the company is expected to see a boost in shipments as it moves past PepsiCo's (NASDAQ:PEP) inventory reduction phase. This shift is projected to result in shipments surpassing consumption levels in 2025. Despite current challenges, InvestingPro shows the company has maintained impressive revenue growth of 19.36% over the last twelve months. However, challenges are anticipated in the fourth quarter of 2024 due to costs related to incentive agreements and the comparison against lower promotional levels from the previous year.
Celsius Holdings is also preparing for spring shelf resets, although specific plans with retailers have yet to be finalized. In light of these factors, Piper Sandler has revised its sales estimates for Celsius. The firm now projects sales to reach approximately $1,620 million in 2025, a decrease from the initial estimate of $1,690 million. Similarly, the 2026 sales forecast has been adjusted down from $1,835 million to $1,725 million.
The reduction in the price target from $47 to $33 reflects a more conservative valuation, with Piper Sandler applying a multiple of around 4x enterprise value to sales (EV/Sales), down from the previous 5x. This change is based on a tempered growth outlook for Celsius Holdings. According to InvestingPro analysis, the stock currently trades at an EV/EBITDA multiple of 24.2x and appears undervalued based on its proprietary Fair Value model. Despite the lowered price target and sales estimates, the Overweight rating suggests that Piper Sandler continues to see the stock as a potentially valuable investment.
In other recent news, Celsius Holdings has experienced 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. Firms like TD Cowen and Deutsche Bank (ETR:DBKGn) have adjusted their stance on Celsius due to a slowdown in sales growth and market risks. While TD Cowen downgraded the stock from 'Buy' to 'Hold', Deutsche Bank initiated coverage with a 'Hold' rating, citing potential for a rebound in the energy drink sector by 2025.
Morgan Stanley (NYSE:MS) maintained an Equalweight rating but lowered its target for the company to $42, reflecting a dip in market share and a more conservative outlook on future earnings. Meanwhile, Stifel and Needham maintained a Buy rating for Celsius, with Stifel praising the company's innovation efforts and focus on key demographic targeting.
In recent developments, Celsius management has outlined strategies to improve sales velocities in 2025, increase shelf space, and introduce new product formats. These are recent developments that investors may find significant as they assess the company's performance and potential in the context of the broader industry.
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