Investing.com | Jun 23, 2022 18:54
By Investing.com Staff
Today's sharp gains in Celsius Holdings Inc. (NASDAQ:CELH) appear related to investor speculation that beverage giant PepsiCo (NASDAQ:PEP) could turn its sights on the company after terminating its distribution agreement with Bang.
Commenting on the situation, Stifel analyst Mark Astrachan notes that Pepsi is meaningfully under-indexed in the energy drink sector to its largest peer Coca-Cola (NYSE:KO) and therefore could seek to acquire Celsius.
Astrachan said while he has no knowledge of discussions between Pepsi and Celsius, Celsius is the fourth-largest U.S. energy drink brand, with a 4.1% share. It also has seen 218% average growth on a TTM basis reflecting strong distribution gains via Anheuser-Busch and meaningful increases in brand awareness.
"Duplicating current Bang distribution, we estimate PepsiCo could double Celsius’ current distribution, meaningfully accelerating market share and sales growth for the brand," Astrachan commented. "We also think PepsiCo could expedite international expansion for Celsius. We think significant cost synergies are also likely given PepsiCo’s vertical integration in marketing, bottling/manufacturing, and distribution."
PepsiCo could also try to make a run at the largest energy drink player, Monster Beverage (NASDAQ:MNST), the analyst speculates.
"While we have no knowledge of any M&A negotiations or discussions, and unlikely, we think PepsiCo could seek to acquire Monster," he commented. "Despite the breakup fee to be paid to Coke, we estimate a deal could still be accretive given significant cost synergies. An acquisition of Monster would also increase scale in a number of international markets where PepsiCo’s beverage share under-indexes."
Written By: Investing.com
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.