Celsius Holdings Downgraded - Bank of America Analyst Warns Lack of Differentiating Innovation, Cutthroat Competition

BofA Securities analyst Jonathan Keypour downgraded Celsius Holdings, Inc. CELH to Neutral from Buy, maintaining the forecast at $65.

With the company’s market share unexpectedly declining and still down versus the August peak, uncertainty around sales growth now weighs on what had been a more favorable risk/reward profile when they were benefitting from the momentum of the PepsiCo, Inc. PEP distribution deal, the analyst writes.

The company’s U.S. sales continue to be very strong with considerable opportunity supported by rising consumer awareness. 

However, it remains unclear whether recent market share and velocity (dollar sales per points of distribution) declines are seasonal, the analyst flags.

With Monster Beverage Corporation MNST pushing to expand Reign Storm and reclaim lost Bang distribution, and Red Bull maintaining strong marketing, competition could weigh on growth this year, the analyst warns. 

The analyst lowered the fourth quarter sales estimate from $351 million to $341 million to reflect moderating Nielsen data, with adj. EBITDA now $55.0 million vs $56.7 million prior. 

Keypour flagged a lack of differentiating innovation and heightened competition as potential hurdles to Celsius' ability to meaningfully expand market share. 

Overall, while the analyst still sees strong sales and EBITDA potential, Keypour waits for stronger velocity to signal a resumption of momentum in market share gains.

Price Action: CELH Shares are trading lower by 12.38% to $52.21 on the last check Friday.