Is Celsius Stock going to $87? 1 Wall Street Analyst Thinks So.

Shares of functional energy drink maker Celsius (CELH -0.44%) are down 41% in the last month after Nielsen reported that the company’s share of the energy drink market dropped from 10.8% to 10.5% in May.

This market share dip, paired with worries about Celsius struggling to lap the triple-digit sales growth rates it saw following its partnership with PepsiCo, caused Wall Street to take a cautious stance toward the growth stock.

After receiving eight lowered price targets from Wall Street in the last month alone, Celsius welcomed a more upbeat outperform rating from Kevin Grundy with Exane BNP Paribas, who set an initial price target at $87. That target implies a 54% jump from the current price over the next 12 months.

Here’s why I can’t help but agree with Grundy’s optimistic outlook.

Celsius: An opportunity for investors

The top reason why the best is still ahead for Celsius relates to comments made by management at the William Blair Growth Stock Conference. Management explained that, in the early 2010s, Celsius ran a “drill deep” strategy on six specific markets across the United States.

Today, Celsius has a 15% share or higher in five of these six markets, and in the remaining one, South Florida, it has 25% of the market to itself. Celsius now counts 12 major metropolitan areas as having a 15% market share or higher, showing the potential it has as it drills deeper into newer territories across the country, growing its 10% share of the U.S. further.

Need more evidence of this potential?

Celsius is the No. 1 energy drink sold on Amazon, with more than a 20% market share. This shows what the company is capable of growing its share to when its distribution isn’t limited — and it won’t be anymore, thanks to PepsiCo’s help.

Now expanding into Canada, Australia, New Zealand, the U.K., Ireland, and France, Celsius could quickly grow into its somewhat premium forward price-to-earnings (P/E) ratio of 50. Already sporting a robust net profit margin of 19%, Celsius has plenty of cash to fund its big growth plans.

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Josh Kohn-Lindquist has positions in Celsius. The Motley Fool has positions in and recommends Amazon and Celsius. The Motley Fool has a disclosure policy.