In the short term, it will be more challenging for Celsius to further expand its market share.
According to the news from the Wisdom Finance APP, the market share growth of energy drink brand Celsius Holdings (CELH.US) is impressive and expected to achieve super large-scale growth relative to its peers in the next over three years. However, Truist analyst Bill Chappell believes that in the short term, it will be more challenging for Celsius to further expand its market share. Chappell rates Celsius as "hold" with a target price of $60.
When it comes to Celsius' 11.5% market share, Chappell said: "As far as we know, no company's market share, except for Monster Beverage (MNST.US) and Red Bull, can break through 10%." However, although the distribution of PepsiCo (PEP.US) will increase the company's market share, Chappell believes that each incremental growth will be "harder to achieve than the previous one".
In order to find new customers, Celsius must peel off loyal consumers of Monster Beverage and Red Bull, and attract new consumers at a similar pace to that of the past few years in order to achieve revenue growth expectations of 30% and 34% respectively in 2025 and 2026, which may be more difficult to achieve than it looks.
Chappell said that Celsius is a leader in the energy+ category (energy drinks that promote metabolism and fat burning), and the cooperation with PepsiCo has also enhanced the company's influence in convenience stores, which are usually dominated by large companies.
But the stock prices of Monster Beverage and Celsius are not a "zero-sum game", and the growth trajectory of Celsius depends on the stability of Monster Beverage's stock price, or more importantly, on the demand for energy drinks.
Chappell said: "We believe that for Celsius' valuation to have a substantial increase, the stock price of Monster Beverage must stabilize." Moreover, no matter how fast Celsius grows, its valuation will still be closely related to the valuation of Monster Beverage and investors' views on the overall energy drink category.
As of the close of trading on Tuesday in the US stock market, Celsius dropped 6.54% to $55.86.