SodaStream International Ltd. (SODA), the Israeli maker of soda machines, climbed the most in three months in New York on speculation a new model will help the company bolster sales and fend off competitors.
SodaStream, which makes products that turn water into more than 100 flavors of carbonated beverages, gained 9 percent to $37.68 in U.S. trading yesterday, the biggest advance since Nov. 28. The shares plunged 15 percent last week as Winston-Salem, North Carolina-based Primo Water Corp. (PRMW) said it will sell home soft-drink machines that may compete with SodaStream’s. The Bloomberg Israel-US 25 Index (ISRA25BN) of the most-traded Israeli companies in New York slid 0.7 percent yesterday. The TA-25 (TA-25) benchmark index rose 0.7 percent at 10 a.m. in Tel Aviv.
SodaStream’s new device, which makes soda more quickly, demonstrates innovation that may help the company stave off competition, according to Joseph Altobello, an analyst at Oppenheimer & Co. The machine, called Revolution, may help Airport City, Israel-based SodaStream boost unit sales growth that slowed to 8 percent in the fourth quarter, according to Jim Chartier, an analyst at Monness Crespi Hardt & Co.
“Consumer demand for SodaStream remains very strong,” Chartier said by phone from Chicago, where he attended the International Home and Housewares Show. “The combination of them officially launching this machine, and people actually getting to see it in action,” helped to boost shares, he said.
Primo Water introduced a line of carbonated beverage- makers, including a single-serve machine that retails for $299 and will be available in the fall, Mark Castaneda, the company’s chief executive officer, said by phone from Winston-Salem.
‘Building a Category’
“We’re building a category with SodaStream,” Castaneda said. “We’re not trying to take away share, we’re trying to build share together. We’re taking share from Coke and Pepsi.”
Primo Water’s shares gained 5.6 percent yesterday to $2.82. The Nasdaq Composite Index (CCMP) fell 0.2 percent, slipping for the first time in four days.
SodaStream’s machine, scheduled to begin selling by the fourth quarter, will cost less than $200 and reduce the time needed to make a liter of soda compared to the manually operated devices, according to a company statement. Potential sales from new products are not reflected in SodaStream’s stock, which trades for 17.1 times analysts’ earnings estimates, Oppenheimer’s Altobello said.
Competition ‘Very Manageable’
“This is a meaningful step forward for the company, as it improves the consumer experience,” Altobello wrote in an e- mailed report dated March 11. Altobello reiterated a 12- to 18- month price target of $55, and an outperform rating on the stock, meaning he expects it to do slightly better than the market return. “We continue to believe competition remains very manageable as SodaStream’s innovation pipeline, coupled with its first-mover advantage and distribution gains, position it very well for future growth.”
SodaStream displayed the “first commercial version” of the Revolution machine to the public this past weekend at the Chicago Home and Housewares show, said Yonah Lloyd, the company’s executive director of corporate development and communication. Lloyd said that SodaStream may introduce a single-serve soda machine in 2013. He declined to comment on sales projections.
The slowdown in unit sales growth to 8 percent in the fourth quarter from 60 percent in the third quarter came after clients including Bed Bath & Beyond Inc. (BBBY) made holiday-season purchases in the third quarter, Lloyd said last week. Revenue jumped 39 percent in 2011 and is projected to grow 30 percent this year, according to analysts’ estimates compiled by Bloomberg.
Israel, whose population of 7.8 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. The nation is also home to more startup companies per capita than the U.S.
Ceragon Networks Ltd. (CRNT) advanced 0.4 percent to $9.05 in New York yesterday. The shares in Tel Aviv rose 2.4 percent to 34.90 shekels today, or the equivalent of $9.27. The maker of wireless-networking systems said in a statement that it received a $6 million contract to provide mobile network equipment to Globacom Nigeria.
Perrigo Co. (PRGO), the largest U.S. maker of generic over-the- counter drugs, fell 0.5 percent to $104.55 in New York yesterday. The company’s Tel Aviv shares declined 0.1 percent to 395.40 shekels, or the equivalent of $104.97 today.
Refael Lebel, president of Perrigo’s Israeli unit, died March 11 in New York, according to company spokesman Arthur Shannon. An announcement hasn’t been made on who will fill the position.
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