Celsius Rebounds From 52-Week Low as Margin Squeeze Drives Volatility
A shift toward lower-margin brands has put profitability ahead of growth in investors' view.
Overview
- Celsius shares rose Thursday morning in a bounce from Wednesday’s new 52-week low following a selloff tied to shrinking gross margins.
- The company beat first-quarter estimates with adjusted earnings of 41 cents and revenue of about $782.6 million, yet gross margin fell by roughly 4 percentage points as the product mix changed.
- Alani Nu generated about $368.1 million in the quarter and Rockstar added roughly $66.6 million, which lifted sales but increased the weight of lower-margin items.
- Analyst views split as Morgan Stanley stayed positive but cut its target to $55, JPMorgan stayed positive and raised its target to $70, and Roth Capital kept a Buy rating but lowered its target to $65.
- CELH relies on PepsiCo to deliver its drinks and on outside partners to make them, a model that speeds expansion in North America but makes product mix and margins the main swing factors.