Investor sentiment on once-hot energy drink maker Celsius (CELH 3.14%) was cooling significantly over the past few days. Slowing growth, due in no small part to an issue with a distributor of the company’s products, was compounded by two bearish analyst updates. Week to date as of early Friday morning, Celsius’ share price was down by 12%, according to data compiled by S&P Global Market Intelligence.
Two analysts, two different views
The more assertive updating party was Morgan Stanley‘s Eric Serotta, who reduced his Celsius price target to $42 per share, where previously it was $46. This doesn’t change his general view of the stock, which he continues to rate as an equal weight (hold, in other words).
According to reports, the analyst pointed out in his latest Celsius update that growth in the energy drinks market has accelerated lately. However, this seems to be at the expense of Celsius, as the company has lost market share to better-established rivals Red Bull and Monster Beverage.
A more positive take on the company came the previous day. Roth MKM slightly reduced its own price target to $38 per share, down from $40. Interestingly, although this new level is lower than Serotta’s, Roth MKM maintained its buy recommendation on the shares.
Running low on energy?
One advantage Celsius enjoys, and has leveraged in the past, is that it sells a relatively healthy beverage compared to rival energy drinks. Yet there’s not much of an economic moat with such products, and at this point it’s hard to imagine the company will return to the formerly red-hot growth levels that justified such lofty valuations for its stock.
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Celsius and Monster Beverage. The Motley Fool has a disclosure policy.
