Celsius Holdings (CELH) is a Zacks Rank #5 (Strong Sell) that has built a scaled portfolio of energy drink brands including CELSIUS, Alani Nu, and the recently integrated Rockstar Energy.
The company just missed on both the top and bottom lines, and management's own commentary revealed a self-inflicted wound in its flagship brand's distribution strategy. With estimates falling across every timeframe and the stock still overvalued relative to its growth trajectory, this looks like a name to avoid.
About the Company
The Boca Raton based company sells functional energy drinks positioned around fitness and active lifestyles. With CELSIUS, Alani Nu, and Rockstar now under one roof, the company controls roughly one in five energy drinks sold in the United States, giving it real scale in a crowded category.
The company is valued at $7 billion and has a forward PE of 18. The stock has Zacks Style Scores of "D" in Value, "A" in Growth, and "B" in Momentum.
A Disappointing Quarter
Celsius reported Q2 adjusted earnings of $0.36 per share, missing the $0.42 consensus estimate. Revenue of $818 million also fell short of the $883 million estimate despite a double-digit year over year increase.
Profitability took a bigger hit than revenue. Gross margin contracted to 48.1% from 51.5% a year ago, and adjusted EBITDA fell to $184.2 million from $210.3 million.
The most troubling admission came on the flagship brand. Management acknowledged it went too deep on Celsius SKU rationalization, cutting products immediately while the planned cold space, cooler, and end cap gains that were supposed to offset the cuts took longer to materialize. Consumer sell through for the core Celsius brand only declined 2% in the quarter, but net sales fell 12%, with roughly half the gap tied to distributors pulling back orders faster than actual consumer demand fell off.
Guidance Signals a Slow Grind, not a Snapback
Management set expectations for a gradual recovery rather than a quick turnaround. Third quarter Celsius brand sales are expected to stay broadly similar to the second quarter in both dollars and growth rate, with only slight sequential improvement.
Not everything in the portfolio is struggling. Alani Nu remains a bright spot, with tracked retail sales up roughly 56% in the quarter against 21% net sales growth, and management pointing to its largest ever product launch and additional back half offerings. Rockstar integration wrapped up in June with early velocity gains described as encouraging.
But the core Celsius brand, still the company's largest, is the piece investors are most focused on, and it remains under pressure.
Wall Street Is Cutting Targets
The reaction from sell side analysts has been sharply negative, with a wave of price target cuts following the print even as most firms maintained bullish ratings.
Piper Sandler reiterated Overweight but cut its target to $36 from $49. Morgan Stanley reiterated Overweight and cut its target to $42 from $48. JPMorgan reiterated Overweight and lowered its target to $52 from $56. Citigroup reiterated Buy and cut its target to $40 from $50. Bernstein SocGen downgraded shares to Market Perform from Outperform with a $26 target, one of the more bearish calls on the Street.
Estimates Are Falling Fast
The estimate revisions trend confirms the deteriorating picture. Over the last 60 days, the current quarter, next quarter, current year, and next year estimates have been revised lower, with zero upward revisions across any timeframe.
The Zacks Consensus Estimate for the current quarter has fallen to $0.37 from $0.43 ninety days ago. Current year estimates have dropped to $1.51 from $1.59, and next year's number has slid to $1.85 from $2.00 over the same stretch.
Technicals Look Bleak
CELH was a high flyer back in 2023 and 2024, but the stock gave up all those gains and is challenging the 2025 lows.
But this is nothing new, after a nice start early in the year, the stock has fallen from the mid $50s to $25. That 50% haircut was a slow bleed over the last five months. This means a lot of investors are likely stick with bad prices and any up move will be sold.
The 200-day is at $40, but to get back up there we have to see the earnings story change. The $30 area looks like resistance while the recent low of $23.50 was support. A move below that level could bring the $20 price quickly.
In Summary
Celsius delivered a quarter that missed on both lines and exposed a misstep in how the company managed its flagship brand's distribution. With Wall Street cutting price targets across the board, this looks like a stock where the risk still points lower.
For investors who like their risk-reward balanced, the Zacks Rank #5 says look elsewhere. Those interested in a name in the same industry grouping, Darling Ingredients (DAR) is a Zacks Rank #1 (Strong Buy) that is trading near 2026 highs.
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Celsius Holdings Inc. (CELH): Free Stock Analysis Report Darling Ingredients Inc. (DAR): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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