Celsius Holdings stock is Wednesday's pick for IBD 50 Growth Stocks To Watch as it pulls back from recent highs and tests a moving average. The energy drink maker continues to expand its global footprint, with Australia next on its list, but shares pulled back on Wednesday following news of a change in its agreement with PepsiCo.
Celsius makes carbonated and noncarbonated energy drinks and powders marketed toward fitness enthusiasts. The beverage maker ranks No. 1 out of 17 stocks in the beverages nonalcoholic group. The group ranks 89th out of the 197 industry groups IBD tracks.
Late Tuesday, Celsius announced it is amending its agreement with Pepsi. The update calls for "continued focus on and actions to support" the distribution of Celsius-licensed products. Shares tumbled around 6% on Wednesday. Pepsi stock gained around 0.4% on Wednesday.
In other news, Celsius continues to expand into more territories.
"We're pleased to introduce our refreshing, great tasting and functional Celsius energy drinks to consumers in Australia and New Zealand," Chief Executive John Fieldly said in the news release dated March 26.
In addition, Wedbush raised its price target to 100 from 90 and maintained its outperform rating on the energy drink stock on Wednesday, but that did not help the stock.
Energy Drink Stock Retreats From Highs, In Profit Taking Zone
Celsius stock bounced around after reaching recent highs. Wednesday's steep drop took the stock down to its 21-day exponential moving average, where it is seeking support.
The energy drink stock soared 20.4% on Feb. 29 in huge volume, following the company's better-than-expected results for the fourth quarter. The stock broke out of a long, undefined base with a 68.95 buy point that day. Shares are in the 20% profit zone of the buy point, telling investors it's time to take some profits.
Celsius stock continued to climb to a record high of 99.62 on March 14, but closed down nearly 2.8% that day. The powerful move created a power from pivot flag, as it advanced more than 20% from the buy point within the 15 session time frame, according to MarketSurge pattern recognition.
Celsius Profits Expected To Pop
Celsius reported earnings of 17 cents a share during the fourth quarter, and an improvement from the 12-cent loss per share in the prior year's same quarter. Quarterly revenue spiked 95% and slowed for the second straight quarter, after two triple-digit quarterly increases.
Gross margin improved to 47.8% in the fourth quarter, up from 44.4% in the prior year's same quarter.
Current quarter profits are expected to increase 81% and 99% in the following quarter, as shown on the bottom of the MarketSurge weekly chart.
Full-year 2024 earnings are estimated at $1.08 per share, or a 40% rise according to FactSet data. The energy drink stock holds 98 IBD Composite Rating and an 81 Earnings Per Share Rating.
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