Celsius' 'Better-For-You' Edge Could Unlock Equity Upside, Says JP Morgan Analyst

JP Morgan analyst Andrea Teixeira initiated coverage on Celsius Holdings, Inc. CELH with an Overweight rating and a price forecast of $37.

Celsius Holdings ranks as the 3rd largest energy drink brand in the U.S., aligning with key consumer trends like health, wellness, and zero sugar. Despite a slowdown in the U.S. energy drink market, Teixeira sees the company’s strong growth prospects in these sectors will continue to drive top-tier growth.

According to the analyst, Celsius stands out in the energy drink market with broader appeal, attracting higher-income and female consumers. Its premium, ‘better-for-you’ positioning and fruit-forward flavors make it more accessible to younger, white-collar workers, in contrast to brands like Monster Beverage Corporation MNST or Red Bull.

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The Vibe line, with bolder flavors, adds to its unique appeal. Unlike other emerging brands that faded, Celsius maintains staying power due to its distinct identity and differentiation, Teixeira writes.

Long-term, Celsius is positioned to benefit from key consumer trends, driving market share gains both in the U.S. and internationally.

As the category recovers and consumers increasingly choose functional beverages, Celsius’ valuation discount may narrow compared to other fast-growing consumer brands.

The analyst suggests that Celsius’ current 10% share of the U.S. market could see a 10-29% increase in equity value, assuming Monster’s U.S. market share drives 60-70% of its valuation.

This estimate, however, doesn’t account for further market share growth, international expansion, entry into new categories, or margin improvements, Teixeira adds.

The analyst projects the company to report adjusted earnings per share of $0.70 in FY24 and $0.96 in FY25.

Price Action: CELH shares are trading higher by 5.38% to $31.36 at last check Thursday.

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