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Celsius Holdings (NASDAQ: CELH) Has Had An Amazing Run – What Is Behind It?

Analyst Team trader
Updated 11 Mar 2024

Celsius Holdings (CELH), a company that has carved its niche in the energy drinks sector, has outpaced the biggest of the tech giants with an astonishing 5-year return of 5000%+. This spectacular performance has made Celsius a standout stock, capturing the attention of investors and analysts alike. In light of this mornings session pullback we wanted to take a closer look.

The robust financial health of Celsius Holdings has been highlighted in their recent quarterly report, which showcased a powerful EBITDA of $65 million. This figure not only surmounted analysts' expectations but also reflected the company's operational prowess with improved gross margins and amplified revenue growth.

The report painted a picture of a company that efficiently manages its resources. Celsius' gross profit amplified by an impressive 110% to $166 million, and its gross profit as a percentage of revenue soared to 47.8%. This profitability can be attributed to a strategic focus on waste management, astute raw material sourcing, and leveraging promotional allowances to the company's benefit.

Shareholders have reasons to cheer, with earnings per share in Q4 reported at $0.17, or an adjusted $0.15. Celsius' ability to grow its organic sales by 95% to $347 million—an uptick that outstripped consensus estimates—demonstrates the company's robust sales strategy and market appeal.

The market's response to Celsius’ performance has been a resounding vote of confidence. With analysts delivering a consensus “Strong Buy” rating on the stock and setting a mean price target at $90.2, investor optimism is palpable. To top it off, B. Riley, one of the prominent financial firms, has raised its price target for Celsius to a Street-high of $110, suggesting a significant upside from current levels.

Such bullish outlook is echoed across the board, with 12 out of the 14 analysts covering the stock endorsing a “Strong Buy” rating, and the remaining two advising a “Hold.” The consensus target is some 7.5% from the current mark, so the question remains as to whether there is enough in this one.

Is Todays' Correction Merely An Anomaly?

Starting the day today down 6.77%, there are questions as to whether the excitement off the back of the upgrades was shorter lived than anticipated. Even with this pullback, Celsius shares have bolstered more than 40% year-to-date, and we are keenly interested in whether the stock's upward trajectory will continue. With strong corporate earnings, efficient operations, and solid market analyst support, Celsius Holdings not only narrates a tale of extraordinary growth but also hints at a future brimming with potential.

An energy drink manufacturer challenging the dominance of traditional tech and AI stock winners may surprise some, but is a key reminder to take a broad view on the market where possible. As it stands, betting against this beverage behemoth might not be the flavour of the times.

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The AskTraders Analyst Team features experts in technical and fundamental analysis, as well as traders specializing in stocks, forex, and cryptocurrency.