Bank of America Global Research downgraded Celsius Holdings , Inc. (NASDAQ:CELH) to a Neutral rating (From Buy) while maintaining a 12-month price target of $65.00 on the beverage company as they continue to unexpectedly lose market share.
CELH remains below its August peak, facing uncertainty regarding sales growth. This uncertainty has shifted the once favorable risk/reward profile, which was boosted by the momentum of the Pepsi distribution deal.
“CELH US sales continue to be very strong with considerable opportunity supported by rising consumer awareness.” Wrote BoA analysts in a note.
Yet, uncertainties arise regarding recent declines in market share and velocity – it's unclear if these are seasonal or indicative of a larger trend.
With Monster (MNST) aiming to broaden Reign Storm and recapture lost Bang distribution, and Red Bull sustaining powerful marketing efforts, there's potential for competition to impact growth in the coming year.
To foster a more favorable outlook from BoA, Celsius Holdings must improve both velocity and market share. Strategies to achieve this goal involve optimizing shelf space in stores and diversifying the product range. This includes the introduction of new products like canned and powdered flavors, alongside the 16oz Essentials line, recently launched and slated for nationwide expansion this year.
Additionally, efforts to expand into international markets, particularly the ongoing rollout in Canada, are underway. Despite these initiatives, BoA emphasizes potential obstacles, citing concerns about a lack of distinctive innovation and heightened competition that may impede Celsius' substantial market share growth.
Shares of CELH are down 8.22% in mid-day trading on Friday.