Despite Recent Dips, Celsius Holdings Remains A Strong Buy: Inside This Analyst's Raised Price Target

Roth MKM analyst Sean McGowan reiterated a Buy rating on Celsius Holdings, Inc. CELH, raising the price target to $220 from $180. 

The analyst notes that CELH shares dropped over 8% yesterday and are down more than 12% since hitting an all-time high less than two weeks ago (vs. S&P500 down ~1%).

McGowan sees no fundamental reason for the pullback, even when the stock had more than doubled over the first eight months and was up close to 50% in the five weeks prior to hitting that all-time high, setting up a possible correction.

Recent NielsenIQ data (as reported in BevNET) show that the increase in retail sales of Celsius's products has not only remained strong, growing more than 160% YoY, but was accelerating over the course of the summer, the analyst notes.

Given the strength in the retail segment, the analyst expects International to be the next big growth driver. Celsius derived approximately 6% of total revenue from outside the U.S. in 2022. 

While the analyst expects that to drop to less than 4% in 2023, beginning in 2024, international sales will rise more rapidly than U.S. sales. McGowan expects more than 10% of total revenue in 2025 from outside the U.S.

The analyst is expecting greater expense leverage in 2024 and 2025.

McGowan expects selling and marketing costs to be higher as a percent of sales in 2024 and 2025 compared to 2023 but slightly lower than the prior forecast.

The analyst raised FY24 EPS estimate to $2.86 from $2.59. 

Price Action: CELH shares are trading lower by 6.66% to $169.33 on the last check Thursday.

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