BofA Securities analyst Jonathan Keypour downgraded Celsius Holdings, Inc. (NASDAQ:CELH) from Neutral to Underperform, lowering the price forecast to $32 from $60.
Although the energy drink category had been consistently growing at a sustainable rate of +4-5% annually, the analyst notes that this growth began to decline earlier this year.
According to the analyst, the slowdown in the category will have an outsized impact on Celsius. The analyst has not forecasted meaningful recovery until next summer.
The slowdown was partly due to the company's rapid growth rate since 2021, which has further impacted the current weak consumer environment.
Also Read: Celsius Power Surge: Q2 Earnings And Sales Smash Expectations, Stock Climbs
Yesterday, the company reported second-quarter earnings per share of 28 cents (+65%), beating the street view of 23 cents. Quarterly sales of $402 million (+23%) exceeded the analyst consensus of $393.165 million.
Given the sharp sequential decline in sales from the first quarter to the third quarter of 2024, the analyst decided to lower estimates for the fourth quarter and beyond.
Keypour reduced the sales forecasts for FY24, FY25, and FY26 by 6%, 18%, and 23%, respectively.
More notably, the latest Nielsen data through July 27 reveals that headline Celsius sales growth is slowing, prompting the analyst to cut the third-quarter sales estimate by 12.6%.
Price Action: CELH shares are trading higher by 1.40% to $39.95 at last check Thursday.
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