Shares of energy drink company Celsius Holdings (CELH) popped on Wednesday after the company reported financial results for the first quarter of 2022 that were ahead of analysts' expectations. The stock finished 15% higher for the session, even though the S&P 500 finished the day down 1.7%.
In Q1, Celsius generated revenue of $133 million, which was up a whopping 167% year over year. This outsized revenue growth is due to an ongoing reality for the company: It's continuing to find more and more stores that are willing to sell its fitness beverages. On top of this, health clubs where Celsius products are sold are increasingly open for business after shuttering during the earlier stages of the pandemic.
Not only was revenue ahead of expectations, but Celsius's profit margins also impressed Wall Street. While the company is facing increased pressure on its supply chain (specifically with aluminum cans), it was able to produce earnings per share (EPS) of $0.09, whereas analysts only expected EPS of $0.03.
Because of this, various analysts increased their price targets for Celsius stock today. For example, Ladenburg analyst Jeffery Cohen raised his target from $113.50 per share to $120 per share, according to The Fly.
It was a solid quarter for Celsius as its products continue to gain a larger following among consumers. Management said it surpassed energy drink Rockstar for the fourth spot in the energy drink category for the first time. But one negative thing to note from Q1 was the company's gross margin. It fell from 41.1% last year to 40.4% this year, as inflation impacted its cost structure.
To remedy this, Celsius management introduced some price increases to its products on April 1. These are being implemented now.
It will be interesting to see how consumers respond to the higher prices and whether it will impact its otherwise stellar top-line growth.