Updates on Celsius and Shockwave Medical

As earnings season rolls on, I wanted to post a few additional quick updates on two current Watch List stocks.

Celsius Holdings (CELH)

Celsius' Q1 earnings report sent the stock soaring, with the shares gaining over 30% in a week. The results truly were a blowout, with revenue growing 95% year-over-year to $133 million, and North American revenue more than doubling. Celsius is successfully leveraging new partner PepsiCo's massive distribution network to gain more shelf space across all retail outlets. The brand is now a solid #3 in the energy drink category (behind Red Bull and Monster), with market share increasing to 7.5% this quarter from about 3.5% a year ago.

I was also encouraged to see the company's gross margins continue to improve, reaching 43.8% in Q1, a nice increase from 40.4% in the year ago quarter. Growth is a major part of the story, but we need to see profitable, cash producing growth in the long run to meet our targets. Celsius is on its way to Monster-like 60% gross margins.

It's pretty clear that my initial growth targets are proving to be too conservative for Celsius. Re-working the model to add growth for '23 and '24, and easing on share dilution assumptions, I'm raising the fair value estimate to $122 from $112.

Shockwave Medical (SWAV)

Shockwave's Q1 results were also extremely strong, with 72% revenue growth driven almost entirely by increased purchase volume of its IVL catheters. Not much additional to say about this one other than it continues to execute well on its business plan to grow usage of IVL. The Neovasc acquisition (covered in the original write-up) also closed this quarter.

Management's increased revenue guidance for 2023 is $700-720 million, well above previous guidance of $660-$680 million. I've adjusted growth targets likewise and the fair value price gets a bump from $183 to $195. Even with that, the shares look pretty expensive at present.