Israel Matzav

#BDSFail SodaStream stock bubbles up

Shares of at-home carbonation specialist SodaStream closed up by more than 8% Monday after analyst David Kaplan of Barclays raised the firm's price target on the stock to $100 per share.

For those of you keeping track, that's nearly 82% higher than Barclays' previous target of $55, and it also represents a 45% premium to Monday's closing price at just above $69 per share. All told, shares of SodaStream are up almost 28% over the past month and 54% year to date in 2013.

So why all the optimism?

Kaplan believes that "conservative estimates for 20 percent top line growth are not priced in." More specifically, he thinks SodaStream's sales will have increased 28% when all is said and done this year, followed by another 20% increase in revenue for 2014. He also says that as a result, earnings per share should come in around $2.55 this year and $3.28 in 2014.

...

Of course, investors have every reason to believe him; less than three weeks ago, SodaStream management outlined a perfectly reasonable plan to achieve sales of at least $1 billion by 2016. In fact, that announcement was enough to quickly prompt upgrades from analysts at both Oppenheimer and Citigroup, who both currently hold more conservative price targets of $68 and $66 per share, respectively.

What's more, less than four weeks ago, the Israel-based company maintained its habit of crushing analysts' estimates by turning in solid first-quarter earnings results. To be sure, it's hard not to be impressed with SodaStream's first-quarter year-over-year revenue growth of 34% to $117.6 million. In addition, adjusted earnings per share managed to increase 24% to $0.68.

Better yet, the company's razor-and-blade model is paying off, as carbonator refill revenue increased 101% and syrup sales rose 119% from the first quarter of 2012. Finally, soda-maker sales showed no signs of letting up after growing 78% from the same year-ago period, and the massive United States market should soon become SodaStream's largest.

Labels: BDS

posted by Carl in Jerusalem @ 10:07 AM