Celsius Holdings Inc. saw its stock price rise 2.8% on Friday, closing at $29.18, after Bernstein SocGen launched coverage with an Outperform rating and a $44 price target. The move provided a fresh catalyst for the energy drink maker, which has been under pressure in recent months. However, investors remain cautious as the company navigates the rapid growth of its Alani Nu brand against margin erosion and regulatory headwinds.
Analyst Confidence and Portfolio Shift
Bernstein analyst Cristian Rios initiated coverage with a bullish stance, highlighting Celsius's transformation from a single-brand energy drink company into a multi-brand powerhouse encompassing CELSIUS, Alani Nu, and Rockstar Energy. The $44 price target suggests significant upside from Friday's close, but the stock's trailing price-to-earnings ratio of approximately 65 indicates the market is already pricing in substantial future profit growth.
First-Quarter Results and Portfolio Performance
Celsius reported first-quarter revenue of $782.6 million, a 138% surge year-over-year, fueled by the recent acquisitions of Alani Nu and Rockstar Energy. Adjusted diluted earnings per share came in at $0.41, while adjusted EBITDA rose to $195.5 million. Chairman and CEO John Fieldly described the quarter as a defining period, noting the company achieved a 20.9% dollar share of the U.S. energy drink category.
Alani Nu contributed approximately $368.1 million in first-quarter sales, with retail sales doubling year-over-year in the 13 weeks ended March 29. The core CELSIUS brand also showed resilience, growing retail sales by 6% in the same period. Rockstar Energy added $66.6 million in sales, though its retail sales declined 13% year-over-year.
Margin Pressure and Regulatory Risk
Despite the top-line growth, gross margin contracted to 48.3% from 52.3% a year earlier, partly due to the lower-margin profiles of Alani Nu and Rockstar. The deceleration in core CELSIUS brand growth from its earlier hyper-growth phase also weighs on sentiment. Moreover, regulatory risk has intensified. On June 4, Texas Attorney General Ken Paxton announced an investigation into whether Celsius and Alani Nutrition misled consumers about the safety of energy drinks for children and teens, noting each 12-ounce Alani Nu can contains 200 milligrams of caffeine. Celsius has denied the allegations, stating its labels disclose caffeine content and include responsible-use guidance.
Upcoming Catalyst: Jefferies Consumer Conference
Investors are now looking ahead to Celsius's appearance at the Jefferies Consumer Conference on June 16–17. Management comments on PepsiCo distribution, Alani Nu demand, gross-margin recovery, international expansion, or the Texas probe could significantly influence the stock. At current levels, Celsius appeals only to those willing to accept high risk in exchange for a potential growth recovery, as the stock remains far from a cheap defensive play.
