Jefferies Keeps Buy Rating on Celsius Holdings Despite Acquisition Uncertainty

Jefferies analyst Kaumil Gajrawala maintains a Buy rating on Celsius Holdings (CELH) with a price target of $64. He expects the Rockstar acquisition and integration into PepsiCo's distribution network to boost Celsius Holdings' market share to around 20%. The analyst sees this as a positive development for both companies, improving margins and revenue growth.

July 2, 2025

Jefferies analyst Kaumil Gajrawala has reiterated his Buy rating on Celsius Holdings (CELH) with a price target of $64, following the company's acquisition of Rockstar Energy in North America and its strategic partnership with PepsiCo. The analyst expects the Rockstar acquisition and integration into PepsiCo's distribution network to boost Celsius Holdings' market share to around 20%. This move is seen as a positive development for both companies, potentially improving margins and revenue growth.

Celsius Holdings' shares surged 5.34% intraday on July 2, 2025, following the announcement of the strategic partnership with PepsiCo. The partnership includes PepsiCo's investment of $585 million, elevating its ownership stake to 11%, and the acquisition of Rockstar Energy and integration of Celsius's Alani Nu into PepsiCo's 18,000 U.S. retail outlets [1]. This strategic alignment positions Celsius as the "strategic energy drink captain" in the U.S., targeting both low-sugar and high-caffeine consumers.

The acquisition of Rockstar Energy complements Celsius's existing portfolio, diversifying its offerings to cater to functional energy drink enthusiasts and traditional consumers. The partnership aims to increase Celsius's U.S. market share from 8% to 15% within three years, leveraging PepsiCo's global distribution to boost retail presence by 15-20% within 18 months [2].

The financial implications of the partnership are compelling. Celsius's Q2 2025 revenue surged 84% year-over-year, driven by operational efficiencies and brand diversification. Analysts project PepsiCo's earnings to grow at a 10.8% annual rate, bolstered by its expanded presence in the functional beverage segment [3]. By offloading Rockstar, PepsiCo frees up capital to reinvest in high-growth areas, while Celsius gains a broader consumer base.

The partnership aligns with broader industry trends, as traditional soda markets decline at a -0.9% CAGR through 2025, and demand for low-sugar energy drinks rises. The global energy drink market, valued at $87 billion in 2024, is expected to grow at a 7.9% CAGR through 2032 [4].

For investors, the collaboration represents a dual win: PepsiCo's established scale and distribution amplify Celsius's growth potential, while Celsius's innovation pipeline injects dynamism into PepsiCo's portfolio. The 5.34% intraday surge in Celsius shares following the partnership announcement reflects market optimism about this synergy [5].

References:
[1] https://www.ainvest.com/news/celsius-holdings-celh-surges-5-34-pepsico-partnership-strategic-brand-expansion-2508/
[2] https://www.ainvest.com/news/pepsico-strategic-deepening-celsius-holdings-catalyst-energy-drink-market-dominance-2508-25/
[3] https://www.ainvest.com/news/celsius-holdings-celh-surges-5-34-pepsico-partnership-strategic-brand-expansion-2508/
[4] https://www.ainvest.com/news/pepsico-strategic-deepening-celsius-holdings-catalyst-energy-drink-market-dominance-2508-25/
[5] https://www.ainvest.com/news/celsius-holdings-celh-surges-5-34-pepsico-partnership-strategic-brand-expansion-2508/