Shares of Celsius Holdings (CELH +2.79%) are currently trading 73% off their all-time high. Lower sales are to blame as its largest distributor made inventory adjustments that weighed on Celsius' financial results last year.
In the wake of new sales and market share data, Morgan Stanley is maintaining its equal weight (hold) rating on the shares and also keeping its price target at $42, which implies upside of 66% from where the stock trades as of this writing. Wall Street price targets are usually estimates of where an analyst thinks the stock will trade within the next 12 to 18 months.
It's uncertain when the stock will recover, but Celsius is emerging as a leading brand in an industry with excellent long-term growth prospects.
Celsius is still on track for monster growth
The firm noted data from Nielsen that showed the most recent week's sales down 6% year over year. Importantly, Celsius' market-share position appears to be holding fairly steady with a 80 basis-point decline from the year-ago period.
Celsius has capitalized on its position as a "better-for-you" energy drink option made with no sugar and natural ingredients. The company noted its market share increased to 11.6% in October as it emerges as a growth leader in the energy category. It's got a bright future with per capita spending on energy drinks expected to grow significantly in the coming years.
Celsius can recover when the economy is stronger, but the timing is difficult to predict. The global energy drink market is expected to increase by $47 billion in value to reach $240 billion by 2027. That's a huge opportunity for Celsius with its annual revenue of just $1.4 billion.
Last March, investors were paying over 100 times earnings for Celsius stock. Now, shares fetch a reasonable forward earnings multiple of 27, putting investors in a better position to realize solid long-term returns moving forward.
