This week, there was a lack of interest from investors in Celsius Holdings.
This week, there was a lack of interest from investors in Celsius Holdings.
The enthusiasm towards energy drink manufacturer Celsius (CELH 1.90%) has noticeably decreased recently. This deterioration is partly due to a problem with a distributor of their products, which has contributed to a decrease in growth rates. Furthermore, this issue is exacerbated by two negative analyst reports. As of early Friday morning, the stock's value has decreased by 12%, according to data from S&P Global Market Intelligence.
Different perspectives from analysts
The more aggressive analyst, Eric Serotta from Morgan Stanley, revised his price target for Celsius down to $42 per share, a decrease from his previous $46 target. Despite this reduction, he continues to view the stock as neutral, maintaining his equal weight (hold) rating. According to his latest update on Celsius, the expansion in the energy drink market has recently accelerated. However, this growth seems to come at the expense of Celsius, as it has lost market share to well-established competitors such as Red Bull and Monster Beverage.
On the other hand, Roth MKM presented a more optimistic outlook on the same day, lowering their price target to $38 per share from $40. Despite the lower target, Roth MKM maintains its buy recommendation for the company's shares.
Struggling to maintain momentum
One advantage that Celsius has held is its ability to sell a relatively healthier beverage in comparison to other energy drinks. However, economic moats for such products are not substantial, and it is uncertain if we will see Celsius return to its former high-growth levels that warranted such high stock valuations.
The decline in Celsius's stock value has led some investors to reconsider their finance strategies, potentially affecting their investing decisions related to the energy drink sector. The recent negative analyst reports, such as Eric Serotta's revised price target of $42 per share by Morgan Stanley, have raised concerns about the company's ability to compete in the highly competitive energy drink market, dominated by companies like Red Bull and Monster Beverage.