CELH - Celsius Holdings: 35% Drop On Nielsen Data Justified But Reiterate Buy

2024-06-14 11:34:53 ET

Summary

• Celsius Holdings is a beverage company selling healthier energy drinks with broad appeal and plans for international expansion.
• The stock dropped 35% in one month due to Nielsen beverage data suggesting market share loss.
• Revenue growth decelerated in Q1 2024, but adjustments show an actual growth rate of 60%.
• The longer term thesis remains intact and we reiterate BUY, but with less confidence than before.

Celsius Holdings ( CELH ) is a beverage company that sells Celsius branded energy drinks. Celsius positions itself as a healthier alternative to other energy drinks by using less sugar, sodium and artificial preservatives and more healthy ingredients like green tea extract, guarana seed extract, ginger root, and vitamins. In our initiation article , we described how Celsius’ broad appeal beyond the traditional energy drink market, plans for international expansion and strong economic moats underpinned by brand loyalty, distribution channels and economies of scale. In January, we rated the stock a BUY. Since January, the stock shot up from $60 to $96 before conducting a round trip back to today’s price of $62. The drastic drop was largely due to Celsius’ poor Q1 2024 performance as well as recent Nielsen data showing slowing growth and market share loss. ...

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