Bloomberg News

SodaStream Rallies on Green Mountain Profit: Israel Overnight

February 05, 2012

Feb. 3 (Bloomberg) -- SodaStream International Ltd. rose the most in three weeks as investors bet that higher-than- expected profit for Green Mountain Coffee Roasters Inc. will translate into higher earnings for the soda machine maker.

Airport City, Israel-based SodaStream climbed the most since Jan. 13 after Green Mountain, the maker of Keurig brand single-cup coffee pods and brewers, reported adjusted first- quarter profit of 60 cents per share, beating the 36 cent average estimate of 12 analysts surveyed by Bloomberg. The Bloomberg Israel-US 25 Index of the largest U.S.-traded Israeli companies advanced to the highest level in six months, rising 0.1 percent to 93.54.

Like Waterbury, Vermont-based Green Mountain, SodaStream benefits from the so-called razor blade model of retailing, where customers are repeatedly required to buy complementary products such as gas tanks and flavor pouches. The 120-day correlation of gains or losses in the shares climbed to a record 0.37 yesterday, signaling the companies are moving in tandem.

“Most people look at Green Mountain as the model for SodaStream,” Jim Chartier, an analyst at Monness, Crespi, Hardt & Co., said by phone from New York yesterday. “If Green Mountain sales are strong, people are figuring out that Soda also had a good holiday period. They see some correlation between the sales.”

The Bloomberg Israel-US 25 Index is headed for a 2.4 percent advance this week, outperforming the 0.8 percent drop in Israel’s benchmark TA-25 Index in the same period.

Sales Growth

SodaStream, whose machines turn tap water into more than 100 flavors of soda, rose 3.8 percent to $39.43 in New York yesterday, extending a 21 percent increase since the start of the year.

Shares of Green Mountain gained 24 percent to $66.42, the most since March 10, after the company reported on Feb. 1 that revenue more than doubled to $1.16 billion, the 13th straight quarter of sales growth exceeding 50 percent. Analysts projected $1.06 billion, according to estimates compiled by Bloomberg.

SodaStream will probably report first-quarter sales rose 23 percent to 55.4 million euros ($72.8 million), and that adjusted net income climbed 57 percent to 6.65 million euros, according to the median estimate of six analysts surveyed by Bloomberg.

“Green Mountain came up with the single-serve machines and rolled out retail distribution that followed up with consumable goods and that’s what people think Soda will do,” said Chartier, who has a “buy” rating on SodaStream.

Partner Gains

SodaStream, whose appliances are sold in more than 40 countries, raised $109 million in a November 2010 initial public offering. Shares have gained 97 percent since then.

Israel, whose population of 7.8 million is similar in size to Switzerland’s, has about 60 companies traded on the Nasdaq Stock Market, the most of any country outside the U.S. after China. The nation is also home to more startup companies per capita than the U.S.

Partner Communications Co., Israel’s second-largest mobile phone company, rose 4.2 percent to $8.71 after the company’s shares in Tel Aviv advanced 3.5 percent to 31.85 shekels, or the equivalent of $8.56.

Scailex Corp. said on Feb. 1 that it may sell a controlling stake in Partner and that it’s also considering a deal in which it will become a private company.

“Investors think a buyer may pay a premium for control of the company,” Sabina Podval, an analyst at Leader & Co. Investment House Ltd. in Tel Aviv said by phone. “If a new controlling shareholder will come in, with a strong financial backing and a clear agenda for the company, it will be a positive signal to investors.”

Radware Ltd., the developer of security software and cloud- computing technology, gained 3.2 percent to $33.70 after the company was raised to “outperform” from “sector perform” by RBC Capital Markets.

--Editors: Marie-France Han, Emma O’Brien

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: Emma O’Brien at eobrien6@bloomberg.net


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