SodaStream shares rise on upbeat investor meeting
NEW YORK (AP) — SodaStream shares jumped to their highest price since the summer of 2011 Tuesday, boosted by investor optimism coming out of the company's investor meeting.
THE SPARK: SodaStream International Ltd. told investors Monday that it hopes that its annual revenue will reach the $1 billion mark by fiscal 2016.
The company's financial targets also implied adjusted earnings per share of between $6.72 and $8.06 per share for the year, Stifel Nicolaus analyst Jim Duffy wrote in a note to investors.
THE BIG PICTURE: The Israel-based company has rapidly grown since going public in 2010, but its sales have slowed recently as it has struggled to find new customers to buy its home carbonation systems.
Last week, SodaStream said its first-quarter net income grew 20 percent, helped by higher U.S. demand, and beat Wall Street predictions. It also boosted its full-year growth predictions for adjusted earnings and revenue.
THE ANALYSIS: Duffy, who rates SodaStream shares at "Hold," said he's been impressed with the company's results so far, but remains concerned that its profitability may be eroding as it is forced to work harder to find new customers.
He noted that SodaStream's advertising and promotion spending is expected to grow at less than the rate of sales through 2016, so whether the company can achieve its 2016 targets could hinge on if it can get more out of its marketing spending.
Citi's Wendy Nicholson, who backed her "Buy" rating, said whether or not consumers will stop buying soda at the store is the question that probably weighs most on the minds of investors.
She added that she thinks the company did a good job of selling its story to investors at the Monday meeting, which was its first since its 2010 initial public offering.
THE SHARES: Up $6.78, or 12 percent, to $64.07 in afternoon trading, after peaking at $66.05 earlier in the day and marking their highest price since August 2011. Over the past year, the shares have gained about 85 percent.