A Buy with Growth Potential
Needham analyst Gerald Pascarelli initiated coverage on Celsius Holdings, Inc. (CELH) with a Buy rating and a price target of $38. This bullish outlook is based on several factors that position CELH for success in the growing energy drink market.
Firstly, as the third-largest player in the category, CELH stands to benefit from a rebound in the healthier energy drink segment. This trend, coupled with the increasing demand for zero-sugar products, creates a favorable environment for revenue acceleration. Additionally, easier year-over-year comparisons will further boost growth.
While CELH recently experienced its first year-over-year share loss, the analyst remains optimistic. The category's return to a high single-digit growth rate is encouraging, and CELH is well-positioned to capitalize on this trend. The company's planned innovations for 2025 further strengthen its growth potential.
Furthermore, inventory optimization challenges appear to be resolving, leading to improved alignment between sell-through and reported results. This will enhance transparency and investor confidence.
The analyst estimates full-year 2024 revenue and EPS of $1.365 billion and $0.68, respectively. For fiscal year 2025, the estimates are $1.548 billion and $0.93.
It's important to note that CELH does not currently pay a dividend. However, investors can consider other capital allocation programs, such as buyback programs, which can support share prices.
In conclusion, Needham's Buy rating and $38 price target reflect the strong growth potential of Celsius Holdings. The company's favorable market position, upcoming innovations, and improving operational efficiency make it an attractive investment opportunity.