Shares of Celsius Holdings(NASDAQ: CELH) have soared over the past year. And the stock shot higher again last week after the company reported fourth quarter and full-year 2023 earnings.
That led one Wall Street analyst to raise his firm's price target on the fitness drink company by 36%. Peter Grom from UBS maintained his buy rating on the shares but hiked his price target from $73 to $99 per share. That would represent a 14% gain from the stock's closing price as of this writing.
Growth from several angles
Grom sees the company growing rapidly in several areas. Investors already believed in the growth story with the stock rising 57% in 2023.
Yet the company beat investors' expectations again with its latest earnings report as full-year net income reached a record high of $182 million, reversing the prior year's $199 million loss. That improvement came as international revenue jumped 52% in 2023, while sales in North America soared 105%. Additionally, gross profit margin jumped from about 41% to 48%.
A key factor driving the company's sales growth is a distribution partnership it established with PepsiCo about two years ago. That agreement has expanded product distribution and increased shelf space for Celsius drinks in North America.
Investors may be wondering if it's too late to buy the stock after its epic gains year after year. There's no doubt the stock is expensive with a forward price-to-earnings (P/E) ratio of 78, but growth stocks typically enjoy a premium valuation, especially one growing like Celsius. The company's U.S. market share in food, grocery, and convenience stores late last year had doubled from the prior-year period. If it can keep up this pace of growth in the U.S. and abroad, the stock won't look expensive even at its current level.
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Howard Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Celsius. The Motley Fool has a disclosure policy.
