During a recent call with analysts, John Fieldly, the chairman and chief executive of Celsius Holdings (CELH), concluded by urging everyone to “stay healthy and live fit,” echoing the company’s “Live Fit” tagline and encapsulating Celsius’ ethos. While not as iconic as Mr. Spock’s “live long and prosper,” Fieldly’s words resonated with the energy-product company’s mission.
Celsius, renowned for its Essential and Vibe drinks and Fast energy bars, announced fourth-quarter earnings of 17 cents per share on revenue totaling $347.4 million. This performance exceeded analysts’ expectations, who had forecasted earnings of 16 cents per share on $331.5 million in revenue.
Comparatively, in the same period a year ago, Celsius had reported a loss of 12 cents per share on $178 million in sales. Fieldly highlighted the company’s remarkable progress during the March 1 call, citing the fourth quarter as Celsius’ best earnings year in its history. Furthermore, he revealed that the revenue for the year had doubled to approximately $1.3 billion, solidifying Celsius as a “true $1 billion brand.”
Celsius: Big deal with PepsiCo
Wedbush analysts Gerald Pascarelli and Antoine Legault have been vocal supporters of Celsius, celebrating the company’s remarkable ascent in the market. Their enthusiasm for Celsius was evident in March 2023, when the company’s stock was trading at around $25 per share. During this time, they included Celsius in Wedbush’s Best Ideas List, a curated selection of analysts’ top stock picks across various industries, including retail, technology, and financial services.
Pascarelli and Legault highlighted Celsius’ strategic partnership with PepsiCo (PEP), which was announced the previous year. The investment from PepsiCo, a renowned soft drinks and snacks conglomerate based in Purchase, New York, amounted to a substantial $500 million infusion into Celsius, headquartered in Boca Raton, Florida. This strategic collaboration underscored Celsius’ growing prominence and potential for significant growth in the beverage industry.
Despite Celsius’s remarkable performance and impressive stock growth, Wedbush analysts Gerald Pascarelli and Antoine Legault recently took a surprising step by removing the company from the Wedbush Best Ideas List. This decision comes despite Celsius trading at all-time highs, with shares up 45% year-to-date and 65% over the past month alone, outperforming the S&P 500’s 7.7% rise.
On March 4, the analysts reiterated their outperform rating on Celsius and raised their price target to $90 from $75, indicating continued confidence in the company’s prospects. However, the decision to remove Celsius from the Best Ideas List raises questions among investors.
Pascarelli and Legault’s decision may seem unexpected given Celsius’s stellar performance, prompting investors to wonder about the rationale behind it. The energy-drink market is fiercely competitive, dominated by brands like Red Bull and Pepsi’s Gatorade, as reported by Statista. Despite Celsius’s impressive growth and potential, the analysts may have considered various factors, such as market dynamics, competitive pressures, or changes in investment strategy, leading to their decision to remove Celsius from the prestigious list.
Analysts: ‘2023 a transformative year’ for Celsius
The decision to remove Celsius from the Best Ideas List was motivated by analysts Gerald Pascarelli and Antoine Legault’s perception of limited upside in the company’s share price. Despite this adjustment, the analysts maintain their bullish thesis on Celsius and continue to anticipate strong performance from the company.
According to Pascarelli and Legault, 2023 was a transformative year for Celsius, marked by significant milestones such as surpassing $1 billion in revenue and achieving a retail market share of over 10%. This accomplishment is particularly noteworthy in the competitive energy-drink market, where two dominant brands hold a combined market share of nearly 75%.
While growth may have moderated, recent indicators suggest positive momentum for Celsius. Sequential expansion of market share and reacceleration of dollar-sales growth into early February are encouraging signs for the company’s performance.
Looking ahead, Pascarelli and Legault anticipate continued growth driven by various factors, including the national rollout of Essentials, innovation in the Vibe product line, and incremental revenue from international markets. Celsius’s expansion into Canada, followed by the U.K., Ireland, and other European markets, is expected to contribute to its growth trajectory throughout the year.
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