Celsius (CELH 1.06%) stock is enjoying strong momentum. The energy drink specialist's revenue doubled last year, sending the stock soaring. The share price was ticking up 3% in early trading on Wednesday following another bullish call just released by one analyst.
Despite trading at an expensive price-to-earnings ratio of 118, Jefferies Financial Group maintained a buy rating on Celsius shares and raised the near-term price target to $105 from $98. The new target is 12% above the current share price of around $94.
NASDAQ: CELH
Key Data Points
Why buy Celsius stock
Celsius stock trades at a high P/E, but the company is also in the early stages of expanding internationally. Most analysts that cover Celsius on Wall Street rate the stock a buy due to the lucrative growth opportunity ahead and the brand's distribution agreement with PepsiCo.
On the last earnings call in February, PepsiCo CEO Ramon Laguarta mentioned his company is having discussions with Celsius about collaborating on international expansion in specific markets. Celsius recently launched in Canada, the U.K., and Ireland. But a wider rollout across more markets would open a massive growth runway.
Another reason the stock could still hit new highs from these lofty share prices is earnings growth. As Celsius expands, it is seeing margins rise. Earnings per share increased by 242% year over year in the fourth quarter, as strong growth on the top line turned a year-ago loss into a profit.
Celsius is a unique beverage brand in the fast-growing energy drink market. It is focused on the health-conscious consumer by making its beverages without artificial flavors or preservatives. It's clearly catching on with consumers and helping Celsius gain market share.
Regardless of when the stock hits the analyst's target, Celsius still has enough growth runway to send the stock to new highs over the long term.
