Celsius Holdings Inc. (CELH) reported disappointing Q2 earnings on August 8, 2023, missing analyst estimates with adjusted earnings of $0.36 per share against a consensus of $0.42, and revenue of $818 million, falling short of the projected $883 million. This marks a decrease in profitability, with gross margins dropping to 48.1% from 51.5% year-over-year, and adjusted EBITDA decreasing to $184.2 million from $210.3 million. The company’s current market valuation stands at $7 billion with a forward PE of 18.
The company, which controls approximately 20% of the U.S. energy drink market with brands like CELSIUS, Alani Nu, and Rockstar, acknowledged issues with its distribution strategy for the CELSIUS brand. Management’s guidance indicates a slow recovery, projecting third-quarter sales to remain broadly similar to the second quarter with only slight improvements. Following these results, several Wall Street analysts have cut their price targets for CELH, with Piper Sandler reducing its target to $36 from $49 and Morgan Stanley to $42 from $48.
Over the past 60 days, earnings estimates have been revised down across all timeframes, with no upward revisions. For Q3, the Zacks Consensus Estimate has decreased to $0.37 from $0.43, while current-year estimates fell to $1.51 from $1.59. Given the ongoing challenges and a Zacks Rank of #5 (Strong Sell), there are concerns regarding the stock’s future performance, highlighting the potential for further declines.
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