It's not just cans of Celsius Holdings' (CELH +1.32%) functional energy drinks getting bubbly these days. The stock itself soared 8% on Monday after another Wall Street pro put out a gushing analyst note. Celsius stock seems to have been sipping the company's own energy drinks -- it has nearly doubled over the past year. The fast-growing company produces fruit-flavored carbonated drinks that help accelerate metabolism and burn fat along with calories when paired with an active lifestyle.
Analyst Mark Astrachan at Stifel feels that Celsius will beat market expectations when it reports results for its first quarter later this month. His forecast shows a 76% increase in revenue through the first three months of this year, comfortably above the 63% year-over-year increase that his fellow analysts are modeling. Astrachan also sees Celsius growing its top line by 62% for all of 2023, also ahead of where his peers are perched with a gain closer to 55%.
NASDAQ: CELH
Key Data Points
It's in the can
Astrachan -- who, naturally, has a buy rating on the stock with a $115 price target -- is not alone. Celsius has been on the receiving end of Wall Street love letters lately. Last week, it was Piper Sandler's Michael Lavery initiating coverage of the stock with an overweight rating and a price goal of $110.
Lavery sees Celsius as a differentiated brand in the otherwise cookie-cutter energy drink space. There's plenty of market share to take at this point in Celsius' growth cycle, and he feels the distribution deal that the company inked with PepsiCo (PEP 1.14%) last year could help build on the recent momentum. He sees PepsiCo's broader wingspan helping Celsius in the U.S. for now and also eventually overseas, where the brand hasn't excelled the way it has on its home turf.
A week before Lavery's initiation, Sean McGowan at Roth MKM put out a bullish note, sticking to his earlier buy rating and $110 price target. His takeaway from retail channel checks suggests a positive upside revenue surprise in Celsius' upcoming first-quarter report. Encouraging retailer news doesn't provide a lot of color beyond top-line performance, but McGowan assumes that gross margin and operating expenses will keep improving as part of the PepsiCo partnership.
Image source: Getty Images.
Sentiment has certainly improved for Celsius since the world's second-largest soft drink company invested $550 million for an 8.5% stake in the functional beverage specialist last summer. However, this doesn't mean that Celsius wasn't doing well when it was a swinging single. The stock has been a wealth-altering 19-bagger over the past five years.
Analysts banking on a beat is a welcome development for Celsius. It surprised the market by falling just short on the top line in its previous financial update, growing 71% when the consensus called for a 72% advance. It was a rare miss for one of the market's best-performing stocks in recent years.
The climate is getting kinder for Celsius, and not just on the top line. Aluminum prices have been declining since late January. Freight lanes are improving. The playing field is set for a potential "beat and raise" on both ends of the income statement.
We still don't have a date for when Celsius will report its first-quarter results. Its investor relations site could use some updating beyond its informative quarterly presentations.
However, in a world of slow-growing beverage stocks, Celsius Holdings remains a track star. We should find out soon if all of the analysts hustling to post bullish notes ahead of its next earnings release are right.
