Morgan Stanley analyst Dara Mohsenian maintained a Hold rating on Zevia PBC today and set a price target of $2.90.
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Dara Mohsenian has given his Hold rating due to a combination of factors influencing Zevia PBC’s current and future financial performance. The company reported better-than-expected third-quarter results, with a notable increase in revenue and a narrower adjusted EBITDA loss compared to consensus estimates. However, gross profit and margins fell short of expectations, partly due to inventory obsolescence charges and higher costs related to aluminum and Midwest premiums.
Despite the positive quarterly performance and a modest increase in FY25 guidance, there remains uncertainty about Zevia’s ability to fully leverage the growth potential in the healthier soda market. The company’s ongoing investments in customer acquisition and the anticipated continued pressure on gross margins suggest that profitability may remain subdued in the near term. Consequently, while there are encouraging signs, the limited visibility into the long-term market potential justifies a Hold rating at this time.