Home Most Popular Tech Stocks Is It Worth Investing in Celsius Holdings Inc. (CELH) Based on Wall Street’s Bullish Views?

Is It Worth Investing in Celsius Holdings Inc. (CELH) Based on Wall Street’s Bullish Views?

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Is It Worth Investing in Celsius Holdings Inc. (CELH) Based on Wall Street’s Bullish Views?

When it comes to making investment decisions, many investors turn to analyst recommendations to guide them. But how much weight should you give to these brokerage-firm-employed analysts’ opinions? Let’s take a closer look at Celsius Holdings Inc. (CELH) and the current Wall Street sentiment before discussing the reliability of these recommendations and how to utilize them effectively.

Celsius Holdings Inc. currently has an average brokerage recommendation (ABR) of 1.18, on a scale of 1 to 5. This rating is based on the recommendations made by 11 brokerage firms, with 10 of them giving a Strong Buy recommendation. While the ABR suggests a Buy, it’s important to note that relying solely on this information may not be wise. Studies have shown that brokerage recommendations have limited success in predicting a stock’s future performance.

So, why is this the case? Analysts working for brokerage firms often have a vested interest in the stocks they cover, leading to a positive bias in their ratings. Research indicates that for every “Strong Sell” recommendation, there are five “Strong Buy” recommendations. This misalignment of interests means that brokerage recommendations may not always reflect where the stock’s price is heading. Instead, they can serve as a validation of your own research or an additional data point to consider.

While brokerage recommendations may have their limitations, there are other indicators that can provide valuable insights into a stock’s potential. One such tool is the Zacks Rank, which uses quantitative models to evaluate stocks based on earnings estimate revisions. The Zacks Rank classifies stocks into five groups, ranging from Strong Buy to Strong Sell, and has a proven track record in predicting near-term price performance.

It’s crucial to understand the key differences between the ABR and Zacks Rank. The ABR is based solely on brokerage recommendations, displayed as decimals, while the Zacks Rank incorporates earnings estimate revisions and is displayed as whole numbers. Research shows that analysts employed by brokerage firms tend to be overly optimistic in their ratings, while earnings estimate revisions have a strong correlation with stock price movements.

The Zacks Rank assigns grades proportionately across all stocks for which analysts provide earnings estimates. This ensures a balanced representation of the five ranks at all times. Additionally, while the ABR may not always be up-to-date, the Zacks Rank quickly incorporates the latest earnings estimate revisions, making it a more timely predictor of future stock prices.

In the case of Celsius Holdings Inc., the Zacks Consensus Estimate for the current year has seen a 2.3% increase over the past month, reaching $1.86. This positive trend in earnings estimates, along with other factors, has led to a Zacks Rank #2 (Buy) for the stock. While the ABR can be a helpful guide, it’s essential to consider multiple indicators and do your own research.

So, should you invest in Celsius Holdings Inc.? The brokerage recommendations suggest a Buy, and the Zacks Rank supports this sentiment. However, it’s crucial to make an informed decision by considering a range of factors and conducting your due diligence. Remember, investing in the stock market involves risks, and no recommendation can guarantee success.

For more investment research and recommendations, you can visit Zacks Investment Research.

The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.