By Evie Liu

Celsius stock tumbled nearly 8% on Friday following a 25% dive the day before. Investors are selling off shares in the energy-drink company after it warned of some short-term headwinds despite the stellar third-quarter results. The selloff appears overdone as the company's long-term growth outlook remains upbeat, some Wall Street analysts wrote on Friday.

Celsius was a Barron's stock pick in September 2024, when shares were trading at $32. The stock had more than doubled in the following 12 months -- before shares started tumbling again in mid-October and took a dive this week after Thursday's earnings report. The stock closed at $41.52 as of Friday's close.

If you missed the last rally, this could be an opportunity to scoop up some shares. Celsius has expanded significantly over the past year: The company acquired Alani Nu -- another energy-drink brand popular among female consumers -- in April and took over Rockstar Energy in August in a strategic partnership with its largest distributor PepsiCo.

For the latest quarter ended in September, Celsius' total revenue increased 173% from a year ago. Retail sales across its portfolio rose 31% at tracked retailers, which doesn't include direct-to-consumer or online sales, lifting the company's market share to 21%. That is up from a 10% share just two years ago.

Alani Nu delivered an eye-popping 114% growth in quarterly sales. The Celsius brand also grew retail sales by 13% year over year as it added distribution points and rolled out innovative, limited-time flavors.

Despite a strong third quarter, management cautioned that financial results in the fourth quarter could be "noisy."

To start with, Celsius is moving Alani Nu into PepsiCo's distribution system from its previous distributor Anheuser-Busch, which is expected to start in December. That transition could lead to some volatilities in inventory levels, as well as temporarily higher warehousing and logistic costs, said the company.

Management also warned that shipments of the Celsius brand drinks might fall behind retail sales in the fourth quarter, since PepsiCo usually trims its inventory at the end of the year. The same thing has happened last year, which has led to suppressed stock prices at Celsius for several months. Barron's argued the selloff was overdone back then and recommended Buy.

Celsius management emphasized that these issues shouldn't affect the company's performance next year and kept its 2026 guidance unchanged. While the market seems to focus more on the short-term uncertainties, Wall Street is looking past those headwinds.

"While certainly bad news, we view these as transitory issues and the stock's sell-off as overdone," wrote TD Cowen analyst Robert Moskow in a Friday note, "PepsiCo and retailers are eager to execute their plans to expand distribution." Moskow has a Buy rating for the stock with a $55 price target.

Morgan Stanley analyst Eric Serotta noted that growth in the energy-drink category is still strong, and Alani Nu still has plenty of room to run: "We continue to expect distribution and sales growth for Alani in the first half of 2026 following the Dec. one move to the Pepsi system," he wrote. Serotta has an Overweight rating for the stock with a $64 price target.

While leaner inventory and shipment timing may create distortions relative to consumption over the next 12 months, these gaps should normalize longer-term, wrote Deutsche Bank analyst Steve Powers, who noted that consumption trends "remain the best barometer of brand momentum." Powers has a Hold rating for the stock with a $53 price target.

"In our view, disruptions related to shipments, inventory management and margins during the transition period are likely to be temporary, and we see the sharp pullback as a significant buying opportunity," wrote Roth Capital analyst Sean McGowan on Friday, who has a Buy rating for the stock with a $70 price target.

Write to Evie Liu at evie.liu@barrons.com

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November 07, 2025 16:16 ET (21:16 GMT)

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