- Celsius Holdings Inc. (CELH) shares rose nearly 7% to $35.88 in Monday trading, with an intraday high of $36.75, after Truist upgraded the stock to ‘Buy’ and raised its price target to $45, citing the $1.65 billion Alani Nu acquisition.
- The deal aims to strengthen Celsius’ position among women, who drive a growing segment of the U.S. energy drink market, where the combined Celsius-Alani Nu brands hold a 16% share and nearly half of female consumers.
- Despite a 6% sales dip and competition from male-focused Monster and Red Bull, analyst Bill Chappell sees the acquisition offsetting challenges, positioning Celsius to lead category growth projected at 110% from women.
Celsius Holdings Inc. (CELH) is riding a wave of optimism as its stock climbs nearly 7% in Monday trading, reaching $35.88 after peaking intraday at $36.75. This surge follows Truist analyst Bill Chappell’s upgrade of the stock from ‘Hold’ to ‘Buy,’ accompanied by a $10 increase in his price target to $45. The catalyst behind this bullish outlook is Celsius’ strategic $1.65 billion cash-and-stock acquisition of Alani Nu, a move announced last month that Chappell believes will solidify the company’s dominance among women in the U.S. energy drink market. With the two brands already commanding a combined 16% market share according to Nielsen, their appeal to female consumers – where they may account for nearly half the segment – positions Celsius to capitalize on a demographic shift that could redefine the category’s future.
The energy drink landscape has been challenging for Celsius recently, with sales dipping nearly 6% over the past few months, partly due to Alani Nu “cannibalizing” its own performance. However, Chappell argues that this overlap becomes irrelevant once the acquisition closes, transforming a competitive headache into a synergistic strength. He predicts the deal will shift investor focus beyond the rocky patch expected in 2024 and early 2025, spotlighting instead the long-term upside of a fortified portfolio. Women, though currently less than 30% of the category’s sales, are a growing force, and Chappell forecasts they will drive at least 110% of future category growth while the men’s segment stagnates or shrinks. Celsius, with Alani Nu in its arsenal, is poised to “corner” this expanding niche, a segment where rivals like Monster and Red Bull – entrenched in male-focused branding – may struggle to compete.
Chappell’s confidence stems from more than just numbers; it reflects a broader trend in consumer preferences. Monster and Red Bull have leaned heavily on promotional tactics this year, a strategy that has left him cautious about the category overall. Yet, he notes these efforts are unlikely to resonate with women, given both brands’ decades-long emphasis on male consumers. Celsius, by contrast, has cultivated a distinct identity, and the Alani Nu acquisition amplifies this edge. The combined entity’s “highly indexed” appeal to women – evidenced by their outsized share within this demographic – offers a buffer against broader market pressures and a pathway to outsized growth. At $35.88, with a clear runway to Chappell’s $45 target, Celsius is emerging as a standout in a crowded field, betting big on the power of the women’s market to fuel its ascent.
WallStreetPit does not provide investment advice. All rights reserved.
Leave a Reply