Celsius Holdings To Gain From Favorable Cost Trends, High Retail Sales Velocity: Analyst

ROTH MKM analyst Sean McGowan reiterated the Buy rating on Celsius Holdings, Inc. CELH, raising the forecast to $90.

Celsius Holdings surpassed fourth-quarter earnings estimates with $0.17, alongside a revenue increase of 95% year over year. North American revenue spiked 97%, while international revenue jumped 68%.

Per the analyst, the results were driven by the factors that have propelled its growth over the past several years: continued expansion of distribution, increased shelf space in existing customers, and high retail sales velocity.

McGowan projects the company’s future growth to be driven by further gains in shelf space and velocity, as well as international expansion. 

The analyst forecasts revenues to grow by just under 50% in 2024, which represents slower growth, but implies an incremental revenue greater than the company’s total revenues in 2022. 

McGowan predicts favorable cost trends for the company to continue but to be offset in 2024 and beyond by international expansion, which will require additional promotion and where margins are inherently lower. 

The analyst sees gross margin percentage at just below 48% in ’24 and ’25, and a bit lower in ’26.

These apart, the analyst sees the company to continue investing in selling and marketing to maintain momentum, and expect S&M to approximate 22%-23% of revenue for the next several years.

Price Action: CELH shares are trading lower by 4.72% to $77.77 on the last check Friday.

Photo: Courtesy Celsius Holdings