Roth/MKM cuts Celsius Holdings stock target, keeps Buy rating

Roth/MKM has adjusted its outlook on Celsius Holdings (NASDAQ: NASDAQ:CELH), reducing the price target to $45 from the previous $65, while retaining a Buy rating on the stock.

The revision comes in response to anticipated challenges in the third quarter of 2024, as noted by the firm.

The firm's decision is based on recent statements from management at Celsius Holdings, indicating that inventory reductions by PepsiCo (NASDAQ: NASDAQ:PEP) will have a more significant impact on the company's third-quarter revenue and margins than initially expected.

These adjustments are a direct reflection of the information provided by Celsius Holdings regarding its financial expectations.

Roth/MKM remains optimistic about the long-term growth potential of Celsius Holdings despite the expected downturn in the near term. The firm acknowledges that the current softness in the category, coupled with PepsiCo's strategy to tighten inventory levels, may temper investor excitement in the short run.

In other recent news, several financial analysts have revised their outlook on Celsius Holdings. Roth/MKM lowered its price target from $65 to $45 due to anticipated third-quarter challenges stemming from PepsiCo's inventory reductions.

Despite this, the firm maintains a Buy rating, expressing optimism about Celsius's long-term growth potential. Similarly, BofA Securities cut its price target to $26, maintaining an Underperform rating, citing an expected inventory drag in the third quarter of 2024. Morgan Stanley also held its Equalweight rating and $50 price target amid concerns of decelerated sales growth.

Meanwhile, TD Cowen reduced its price target from $68 to $50, while retaining a Buy rating, following the company's second-quarter sales performance. The firm revised its sales growth projection for Celsius in 2024 to 19%, reflecting concerns about broader weakness in the Energy category consumption and increased promotional activities by competitors.

In the face of these challenges, Celsius reported a 23% increase in total revenue, setting a record at $402 million, and a 30% rise in international revenue to $19.6 million. Despite industry challenges, Celsius maintained its category growth leadership and expanded its shelf presence.

InvestingPro Insights

In light of Roth/MKM's recent adjustments to Celsius Holdings' price target, it is worth considering additional metrics and insights that could help investors make informed decisions. According to InvestingPro data, Celsius Holdings boasts a market capitalization of $7.55 billion, with a P/E ratio of 31.23, indicating a valuation that takes into account its earnings power. The company has experienced a substantial revenue growth of 56.5% over the last twelve months as of Q2 2024, highlighting its robust top-line performance.

However, InvestingPro Tips suggest caution due to several factors. Notably, the stock's price has seen significant volatility, with a 1-month price total return of -21.67% and a 6-month price total return of -62.65%, reflecting the market's recent response to the company's challenges. Additionally, the RSI suggests the stock is in oversold territory, which could interest contrarian investors looking for potential rebounds.

For those looking for more in-depth analysis, InvestingPro offers additional tips on Celsius Holdings, including insights on the company's balance sheet health and near-term earnings growth potential. With the stock trading near its 52-week low, investors may find value in considering both the near-term headwinds and the long-term growth prospects that Roth/MKM has identified.

For further guidance, there are 19 more InvestingPro Tips available, which can be accessed for Celsius Holdings at https://www.investing.com/pro/CELH, providing a comprehensive view of the company's financial health and market position.

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