Bloomberg News

Christmas Cover for SodaStream Sparks Gain: Israel Overnight

December 10, 2011

Dec. 9 (Bloomberg) -- SodaStream International Ltd. is posting its biggest weekly gain since July on speculation sales will jump after Bed Bath & Beyond Inc. put the Israeli soda machine maker’s products on the cover of its Christmas circular.

The shares added 17 percent to $35.66 in the past five days, the biggest weekly advance since July 1. SodaStream’s gain was the biggest among members of the Bloomberg Israel-US 25 Index of the largest New York-traded Israeli companies, which rose today for the first day in four. Wireless providers Partner Communications Co. and Cellcom Israel Ltd. rebounded after dropping more than 2 percent yesterday as the government gave Golan Telecom Ltd. an operating license, bolstering competition.

U.S. consumers spent a record $52.4 billion during Thanksgiving weekend, or an average of $398.62 each, up 16 percent from a year earlier, according to the National Retail Federation. SodaStream forecasts rising demand in the U.S. after it boosted the number of stores that carry its carbonation machine and flavor packets. Bed Bath & Beyond, the Union, New Jersey-based home-furnishings retailer, has more than 1,000 locations in the U.S.

“When you have a strong retailer that puts your product on the cover of their circular, that means that they believe in the product,” said Jim Chartier, an analyst who covers retail companies at Monness, Crespi, Hardt & Co., a research and brokerage firm in New York. “They’re going on the cover because Bed Bath & Beyond believes that they can drive sales higher.”

SodaStream fell 1 percent to $35.60 at 10:47 a.m. in New York.

European Crisis

The Bloomberg Israel-US 25 Index climbed 1.5 percent to 84.56, following global markets higher after European leaders agreed to boost a rescue fund and tighten budget rules to stem the region’s debt crisis. The Tel Aviv benchmark TA-25 Index gained 0.3 percent to 1,070.73 yesterday.

Concern among investors that Europe’s debt crisis will curb demand for Israeli exports has pushed the TA-25 and the Bloomberg Israel-US 25 Index down 19 percent this year.

Partner, Israel’s second-largest mobile provider climbed 1.9 percent to $9.05, after declining 5 percent yesterday. Cellcom, the country’s largest cell-phone company, advanced 0.7 percent to $16.26 after losing 2.2 percent yesterday.

Israel’s Ministry of Communications, seeking to boost competition in the market, has issued licenses to new mobile telephone and virtual operators, including Golan Telecom, an Israeli phone company whose partners include Xavier Niel, founder of one of France’s biggest broadband providers.

Mellanox, Teva

Mellanox Technologies Ltd., the Israeli adapter maker that’s partly owned by Oracle Corp., will join the benchmark TA-25 Index on Dec. 15, the Tel Aviv Stock Exchange said in an e-mailed statement yesterday.

Mellanox’s market value has surged to $1.36 billion from $877 million at the end of the first quarter as it benefits from increased demand for cloud computing and customers including International Business Machines Corp. seek to move data more easily over networks.

Mellanox shares in New York fell 1 percent to $34.24 after the Tel Aviv stock advanced 1.5 percent yesterday to 134.10 shekels, or the equivalent of $35.65.

Airport City, Israel-based SodaStream, whose machines turn tap water into 100 varieties of soda in refillable bottles, said in November that 2011 profit may reach 24 million euros ($32 million), above a prior forecast of 20 million euros. Bed Bath & Beyond will probably report $9.44 billion in revenue in fiscal- year 2012, a 7.8 percent increase from the previous year, according to the median estimate of 21 analysts surveyed by Bloomberg.

U.S. Growth

U.S. consumer spending, which accounts for about 70 percent of the economy, grew at a 2.3 percent annual rate in the third quarter, the fastest pace of 2011. The U.S. is SodaStream’s fastest growing market after sales jumped 124 percent in the third quarter.

“Momentum in the U.S. should persist, with positive sales trends at existing retail accounts,” Jon Andersen, an analyst at William Blair & CO. in Chicago, Illinois, wrote in a report Dec. 7. “Retailer support for the system remains strong.”

SodaStream trades at 23.1 times estimated earnings, almost double the 12.6 average multiple for companies on the Standard & Poor’s 500 Index.

The company, whose appliances are sold in more than 40 countries, raised $109 million in a November 2010 initial public offering. Shares have gained 80 percent since the offering.

Brazil, Japan

The soda makers are sold in 9,500 U.S. locations, up from 6,600 at the end of the second quarter, Chief Executive Officer Daniel Birnbaum said last month. Distribution to Wal-Mart Stores Inc., the world’s largest retailer, “is going to happen,” he told CNBC on Nov. 9.

The company entered Japan during the fourth quarter and plans to start selling in Brazil next year.

Israel, whose population of 7.7 million is similar in size to Switzerland’s, has about 60 companies traded on the Nasdaq, the most of any country outside the U.S. after China. It’s also home to the largest number of startup companies per capita in the world.

The shekel gained 0.1 percent to 3.7629 per U.S. dollar in New York. The Israeli currency declined 1.4 percent over the past three months, the best performer among 10 emerging markets in Europe, the Middle East, and Africa tracked by Bloomberg.

Teva Pharmaceutical Industries Ltd., the world’s largest maker of generic drugs, climbed for the first time in three days, rising 2 percent to $40.53. The Tel Aviv shares dropped 0.3 percent to 150 shekels yesterday, or the equivalent of $39.86.

Teva Request

President Barack Obama backed his health secretary’s decision to overrule U.S. drug regulators and deny Teva’s request to sell its emergency contraceptive pill Plan B over the counter.

Secretary of Health and Human Services Kathleen Sebelius ordered Margaret Hamburg, the Food and Drug Administration chief, to reject the application by Petach Tikva, Israel-based Teva, citing potential sales to girls younger than age 17.

“When it comes to 12-year-olds or 13-year-olds, the question is: Can we have confidence that they would potentially use Plan B properly?” Obama said at a press conference.

--With assistance by Alisa Odenheimer and Calev Ben-David in Jerusalem. Editors: Brendan Walsh, David Papadopoulos

To contact the reporter on this story: Tal Barak Harif in New York at tbarak@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net


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