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Investing.com -- Shares of Celsius Holdings (NASDAQ: NASDAQ:CELH) rose 8% following an upgrade from Truist Securities, which raised its rating from Hold to Buy and increased the price target from $35 to $45. The new price target indicates a potential upside of 34% from the closing price of $33.65 on Friday.
Truist Securities analyst Bill Chappell cited the long-term benefits of the Alani Nu acquisition as a key factor for the upgrade, positioning Celsius in a strong spot within the women’s segment of the US energy drink category. Despite a 58% decline over the past twelve months, Celsius shares have shown resilience with a 31.6% rise year to date.
Chappell’s analysis suggests that the market is shifting focus from the company’s short-term challenges to the strategic advantages brought by the recent acquisition. He stated, "We are raising our rating on CELH to Buy from Hold and our 12-month price target to $45 from $35. In our opinion, the market is already looking past the hiccups of the legacy business in 2024 and the brand’s slowdown in 1Q25. Instead, it is starting to focus on the long-term benefits of the Alani Nu acquisition, which in our opinion provides the company with an extremely strong position in the women’s segment of the US energy drink category."
The analyst further elaborated on the attractive valuation of Celsius Holdings, noting that while the stock is trading at the higher end of its peer group, it remains below the three-year median. Chappell believes that the company can maintain or even expand its valuation in the coming quarters, pointing to potential upside from overcoming past inventory issues, benefiting from expanded distribution and support from PepsiCo (NASDAQ:PEP), and accelerating growth of the Alani Nu brand.
"Our 12-month target of $45 equates to 25.5x our 2026 EBITDA estimate, which we believe is fair," concluded Chappell, underscoring his confidence in the company’s growth trajectory and financial outlook.
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