Celsius Holdings Inc (NASDAQ: CELH) rallied as much as 10% on Monday after a Truist analyst said the company’s focus on women as a target market could unlock significant upside in its share price.
In a research note, the investment firm upgraded CELH this morning to “buy”.
Its analyst Bill Chappell upwardly revised his price target on Celsius stock today to $45 that indicates potential upside of another 25% from current levels, which is exciting given it has already more than doubled since mid-February.
Chappell is bullish on CELH’s Alani acquisition
Truist continues to see significant further upside in Celsius shares particularly because the Nasdaq listed firm announced plans of acquiring Alani Nu brand for $1.65 billion last month.
Alani had been cutting into Celsius sales that have declined about 6% in recent months.
But that overhang will effectively be removed from CELH once it completes its cash and stock agreement with Alani, its analyst Bill Chappell told investors in a note today.
Together, Celsius and Alani currently own about 16% of the US energy drinks space.
However, their combined share sits at a much higher, close to 50%, in the women segment of that market.
Note that Celsius stock does not currently pay a dividend, though.
Celsius to expand its footprint in women segment
Chappell expects the Alani acquisition to help Celsius dominate the women segment of the US energy drinks market.
This could prove lucrative for CELH as women are increasingly accounting for a bigger chunk of that category’s sales.
At writing, they drive less than 30% of the energy drink sales globally.
However, the Truist analyst is convinced that women will generate a well over 100% growth in that market in the future.
Meanwhile, rivals like Red Bull and Monster Beverage “have been built to focus on male consumers”, leaving this whole, fast-growing segment entirely for Celsius to own, Chappell added.
Should you buy Celsius stock today?
Celsius stock is now trading at a year-to-date high but Truist continues to recommend loading up on it for the strength of the company’s financials as well.
In February, the energy drinks giant reported 14 cents a share of earnings on a record revenue of about $332 million for its fiscal Q4.
Analysts, in comparison, were at 11 cents per share and $326 million, respectively.
At the time, Jarrod Langhans, CELH’s chief of finance told investors:
We’re pleased that our strategic initiatives are driving long-term share gains and strong retail sales growth.
We believe our capital allocation strategy is fully aligned with our vision to be a high-growth leader and deliver the greatest value to our consumers and shareholders.
The rest of the Wall Street also recommends buying Celsius stock with the mean target of $40 indicating about a 10% upside from here.
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