Celsius Holdings, the maker of the popular energy drink, is going through a rough patch in its core business as it streamlines its product offerings and reorganizes store shelves. But according to a new note from UBS Securities, the company's newer brand, Alani Nu, could help offset the slowdown and keep the long-term growth story intact.
UBS analyst Peter Grom said the slowdown in what the firm calls "Core Celsius" is largely in line with what management had previously guided for. The company is rationalizing its SKUs—industry jargon for cutting lower-selling flavors and sizes—and reworking where its drinks sit in retail stores. While that kind of cleanup can make a brand healthier over time, it often hurts sales in the short run because fewer items are on the shelf and shoppers need to relearn where to find them.
What the Numbers Say
UBS now expects Core Celsius sales to fall 4% in the second quarter. The bright spot, according to the note, is traditional fruit flavors, which are holding up better than other lines. The top 10 SKUs are outperforming the rest, suggesting that the best-selling products are more resilient than the broader lineup.
The analyst trimmed the Q2 earnings-per-share estimate to $0.37 from $0.38 but kept the full-year view unchanged at $1.44. That suggests the near-term pain is mostly about sales mix and shelf resets, not a fundamental breakdown in profitability.
Meanwhile, Alani Nu—a brand Celsius acquired in 2024—is expected to deliver 27% sales growth in Q2. That kind of momentum is critical because it shows the company can still expand even as its flagship line cools. UBS sees Alani Nu as a key driver of a longer-term path back to organic revenue growth and double-digit EPS growth by 2027.
What It Means for Investors
When an analyst lowers a price target without cutting the full-year EPS forecast, the message is usually "same earnings, lower valuation." In plain English, UBS is saying investors may pay less for each dollar of Celsius' profit while near-term sales momentum looks softer—what people mean by multiple compression.
That matters because it shifts what investors will focus on next: not whether Q2 EPS is $0.37 or $0.38, but whether the core business steadies after the SKU trim and whether Alani Nu's projected 27% Q2 growth proves the company can keep expanding even as the flagship line cools. If that confidence returns, the valuation can rise again; if not, solid earnings alone may not move the stock much.
UBS cut its price target on Celsius to $50 from a higher level but kept the full-year EPS estimate at $1.44. The stock has been under pressure this year as investors digest the slower core growth, but the Alani Nu performance could be a catalyst if it beats expectations.
For context, Celsius has been one of the most closely watched names in the beverage space, riding a wave of popularity among fitness-conscious consumers. But competition from giants like Monster and Red Bull, as well as newer entrants, has intensified. The company's decision to trim SKUs and reset shelf space is a common strategy in consumer goods: it clears out underperformers and makes room for winners, but it creates a temporary drag on sales.
Investors will be watching the Q2 earnings report closely for signs that the core business is stabilizing and that Alani Nu is gaining traction. If the numbers come in line with UBS's revised estimates, the stock could find a floor. If they miss, the multiple compression could continue.
In the broader market, similar dynamics are playing out across consumer staples as companies adjust to shifting demand. For example, Constellation Brands faces softer Q1 expectations as Needham trims forecasts, highlighting the pressure on beverage makers to navigate changing consumer tastes.
For now, Celsius investors have a clear narrative: short-term pain from the SKU cleanup, but a potential payoff if Alani Nu delivers on its growth promise. The next few months will tell whether that bet pays off.
