Can Celsius Stock Bounce Back in 2025?

Celsius Holdings (NASDAQ: CELH) puts out a unique sparkling beverage that boosts a body's metabolism by safely boosting your body temperature. The thermogenic properties help a Celsius sipper burn fat and calories at an elevated pace.

Now, if only Celsius can get its shares to heat up, too. The once high-flying stock has been one of this year's biggest disappointments. Celsius shares are down 45% in 2024, off a bruising 70% since hitting all-time highs in March.

There's a very good reason for investors turning on the stock. Celsius captivated the attention of growth investors coming out of the pandemic after more than doubling its revenue for three consecutive years. Reported revenue just turned negative. Celsius has a lot to prove at this point, but at least some analysts are starting to see a buying opportunity in the cascading stock chart.

Can Celsius stock bounce back next year? Let's take a closer look.

Pouring one out

Celsius was a monster stock before peaking earlier this year. The functional beverage company had cranked out double-digit -- if not triple-digit -- annual revenue growth for more than a decade. Expanding from its initial stronghold at gyms and nutrition stores to a presence at most supermarkets, drugstores, and convenience stores gave it a long runway for growth. The top line exploded from $11 million in 2013 to more than $1.3 billion a decade later.

Another important player in this story is PepsiCo (NASDAQ: PEP). The beverage giant got thirsty after seeing Celsius catapult to become the country's third-largest player in the booming energy drink market. Pepsi struck a deal to become a minority shareholder and primary distributor in the summer, smack-dab in the middle of what would be Celsius' three-year run of triple-digit top-line jumps.

The partnership was a win-win deal. PepsiCo was able to find even more new outlets to stock Celsius, including hotel chains, restaurant operators, and casinos. The pairing also helped Celsius make a bigger push overseas, even though international sales are still not moving the needle.

Growth has a funny way of slowing once you've reached the end of shelf space to conquer. The situation was made worse when consumers started to cool on their enthusiasm for energy drinks earlier this year.

The first sign that business was slowing came in early May, when Celsius posted a 37% year-over-year increase in revenue for the first quarter, well shy of analyst expectations. Celsius blamed the unexpectedly sharp deceleration on an inventory adjustment at Pepsi. It countered when retail sales of its products jumped 72%. Celsius records its revenue when its product moves to the distributor.

Unfortunately, it wasn't a one-time blip. Reported revenue slowed to 23% in the second quarter three months later. Celsius pointed to a 37% boost in sales at the retail level.

The dagger was last month's third-quarter release. Revenue declined 31%, even though Celsius noted that at the retail level, its product experienced a 7% year-over-year increase. It's a significant slowdown no matter how you track the popularity of the brand, but Celsius points out that it's still gaining market share.

Image source: Getty Images.

Into the new year

As bad as this year has been, some Wall Street pros are starting to view the sharp sell-off as a buying opportunity. On Thursday, Andrea Teixeira at JPMorgan is initiating coverage of Celsius with a bullish overweight rating. It's the second time in the past week that an analyst has warmed up to the once-bubbly stock that has gone flat. Needham initiated coverage late last week with a buy rating, adding Celsius to its Conviction List.

The new price targets of $37 and $38 from the two analysts respectively are a far cry from when the shares nearly topped $100 nine months ago. It still represents a reasonable 24% and 28% of upside from the current starting line.

Business has slowed, showing that Pepsi knew what it was doing when it was slowing its orders. It will be interesting to see where things go from here. Over the summer, Pepsi opined that folks were dealing with the summer heat by switching from energy drinks to water for more conventional hydration. Will the trend get better now that it's not just the stock that has cooled off?

Wall Street pros aren't giving up on the Celsius story. They see revenue and earnings rising 16% and 36%, respectively, in 2025. It's hard to take that for granted after three straight disappointing quarters and downward revisions, but things could be stabilizing here. Business is also picking up overseas, with Celsius entering six new countries this year alone. The stronger the international push, the easier it will be to stomach the stateside softness.

This year has been brutal for the discarded beverage stock, but heading into 2025 with a lower bar of expectations should make it easier to get back on track.

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JPMorgan Chase is an advertising partner of Motley Fool Money. Rick Munarriz has positions in Celsius. The Motley Fool has positions in and recommends Celsius and JPMorgan Chase. The Motley Fool has a disclosure policy.