Celsius Shares Climb on Acquisition and Growth Prospects. Is the Stock Set to Continue to Rebound?

Core Viewpoint - Celsius has faced significant challenges over the past year, with its stock down nearly 50% despite a recent surge following better-than-expected Q4 results and a major acquisition of Alani Nu for $1.8 billion [1][7]. Recent Results - Celsius reported Q4 revenue of$332.2 million, a 4% decline year-over-year but above the consensus estimate of $326 million [3]. - North American revenue decreased by 6$311.9 million, while international revenue increased by 39% to $20.3 million [4]. - Gross margins improved by 240 basis points to 50.2$0.14, with adjusted EBITDA declining by 4% to $62.9 million due to a 73$1.8 billion, which includes $1.275 billion in cash and$500 million in shares, at a multiple of 12 times 2024 adjusted EBITDA and 2.8 times sales [7]. - Alani Nu generated nearly $595 million in sales last year, with a compounded annual growth rate of 50$137 million [8]. - The combined brands will hold approximately 16% market share in the energy drink category, with Alani also contributing a range of nutritional products [9]. Growth Potential - The acquisition is expected to reinvigorate growth for Celsius, particularly in attracting female consumers, a demographic that both brands target [10]. - Celsius plans to leverage Alani's distribution through PepsiCo to enhance growth, similar to previous strategies that benefited Celsius [11]. - The company anticipates 15% to 20% shelf space gains for its brand this year, which could lead to improved growth rates in 2025 [11]. - Celsius is also focusing on innovation and expanding its international presence, having entered six new countries in 2024 [12]. Valuation and Investment Considerations - Following the recent stock surge, Celsius trades at a forward P/E ratio of around 33 times, excluding contributions from the Alani acquisition [13]. - If Celsius can successfully rejuvenate its brand through innovation and increased shelf space, the current valuation may appear attractive, with significant opportunities in international markets and Alani Nu distribution expansion [14].