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Wedbush upgrades Celsius Holdings on accelerating market share capture

Published Feb 06, 2023 10:11AM ET
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© Reuters. Wedbush upgrades Celsius Holdings (CELH) on accelerating market share capture
 
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By Michael Elkins

Wedbush upgraded Celsius Holdings (NASDAQ:CELH) to an Outperform rating (from Neutral), and raised the price target on the stock to $115.00 (from $95.00).

Analysts there wrote in a note, “Upon initiating coverage of CELH in October, we viewed the potential for distributor transition disruption into the PEP system as the biggest risk to the stock. Since commencing on 10/1/22, not only has the transition gone better than initially expected, but CELH has been delivering accelerating rates of market share capture, which are currently running at all-time highs.”

On 1/18/23, it was announced that rapper Flo Rida, was awarded $82.6 million in a lawsuit against CELH due to a breach of contract which sent shares tumbling down 10% for the day, with pressure persisting through the current day, where shares are down over 18% since the close on 1/17/23. While this is not an ideal turn of events, the analysts believe the recent pullback presents an attractive entry point into the stock, as this lawsuit essentially has little to no bearing on fundamental performance, where at this stage in the company's lifecycle, value creation will come from topline performance and resulting market share gains.

With a sub 5% dollar share of the total U.S. energy drinks category today, CELH has ample whitespace to leverage its position as a disruptor in energy drinks and become a more meaningful part of an energy category that is seeing a clear shift in demand for functional or clean energy.

Considering CELH's current trends and whitespace opportunities, Wedbush raised FY22 and FY23 revenue estimates to $665M and $1.0 billion, respectively. Wedbush also introduced an FY24 revenue estimate of $1.4B.

Shares of CELH are up 9.87% in early trading on Monday.

Wedbush upgrades Celsius Holdings on accelerating market share capture
 

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