Celsius (CELH) stock experienced a sharp decline on Tuesday, falling nearly 13%, following a cautious report from Morgan Stanley regarding the latest sales trend data for the energy drink manufacturer. Analyst Dara Mohsenian highlighted in a research note that sales growth for Celsius Holdings appears to be slowing based on recent Nielsen retail trend data. Specifically, sales growth decelerated to 39% for the week ending May 18, while market share dipped from 10.8% to 10.5% compared to the previous week. Moreover, Celsius' pricing during this period declined by 7.2% year over year.
Despite the short-term caution expressed by Morgan Stanley, the firm recognizes a promising future for Celsius in the U.S. market, driven by increased items per store, better placements in cooler locations, and expansion in nontracked retail channels. However, the upcoming quarters may pose challenges as the velocity growth from its distribution agreement with PepsiCo starts to wane, potentially impacting investor sentiment.
Stifel, a brokerage and investment banking firm, also noted on Tuesday that Celsius sales in the second quarter might face challenges due to adjustments in the amount of Celsius inventory held by the Pepsi system. Consequently, the firm lowered its sales estimates for Q2 to account for anticipated reductions in inventory. Despite revising its sales estimate downwards, Stifel raised its price target for the stock and maintained its buy rating. Harrison Miller, Investors Business Daily author reported, “Stifel raised its price target on CELH stock to 95 from 85 based on increased confidence that Celsius can maintain its market-share gains. The firm also believes that demand is healthy after hosting meetings with Celsius CEO John Fieldly and Chief of Staff Toby David.” Investors should closely monitor future developments to assess the company's continued investment potential.