Celsius Stock Slips After Q1 Miss, But Analyst Sees Strong Long-Term Growth Drivers

JPMorgan analyst Andrea Teixeira reiterated the Overweight rating on Celsius Holdings, Inc. CELH on Wednesday, with a price forecast of $44.

On Tuesday, the firm reported first-quarter adjusted earnings per share of 18 cents. It missed the analyst consensus estimate of 19 cents.

Quarterly sales of $329.28 million (down 7% year over year) missed the Street view of $344.03 million.

Teixeira pointed out several positive aspects, including improving retailer scanner data for Celsius—suggesting underlying strength beyond the headline last three weeks data—and accelerating momentum for Alani Nu.

Management's tone during the earnings call appeared cautious rather than overly optimistic since gross margin came in better than expected.

Also Read: Celsius Heats Up: Acquisition, Analyst Upgrade Fuel Momentum

Given that investor positioning was likely skewed toward short interest ahead of the report, Teixeira writes that the post-earnings stock rebound may be partially driven by short covering after the market had time to digest the results.

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The analyst maintains a ‘bullish’ view on Celsius. The company boasts a favorable growth-at-a-reasonable-price (GARP) profile within the energy drinks category.

Teixeira also argues that energy drinks regained momentum, in contrast to most consumer packaged goods sectors. Consumption trends have generally weakened, making Celsius relatively more attractive in the current market environment.

Celsius also benefits from several consumer “megatrends” (i.e., health-conscious consumers demanding clean energy alternatives).

These broader trends are expected to support sustained growth and give Celsius a competitive edge. Teixeira writes that they enable the brand to capture additional market share both in the U.S. and international markets.

Price Action: CELH shares are trading lower by 0.20% to $35.45 at last check Wednesday.

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