Zacks Investment Research downgraded
SodaStream International Ltd.
) to a Zacks Rank #5 (Strong Sell) on Jan 16 after this maker of
home beverage carbonation systems announced lower-than-expected
preliminary results for full year 2013.
Why the Downgrade?
On Jan 13, the company announced dismal preliminary results
for full year 2013, the final results of which are expected in
February. The company also expects weak results in the first half
For 2013, SodaStream expects its revenues to be approximately
$562.0 million, representing year-over-year growth of 29%, lower
than the company's earlier expectation of 30% growth. Revenues
are also likely to fall short of the Zacks Consensus Estimate of
Net income is expected to be $41.5 million in 2013,
representing a year-over-year decline of 5.5% and in sharp
contrast to management's prior expectation of 23% growth. The
company expects its adjusted net income to be approximately $52.5
million for 2013. The Zacks Consensus Estimate for 2013 earnings
is pegged at $2.57 per share.
Though the company still enjoys double-digit revenue growth,
its failure to achieve the desired margins during the holiday
season along with a difficult consumer spending environment and
currency headwinds resulted in a disappointing outlook for 2013.
In order to push its products in certain markets during the
holiday season, the company had to slash its selling prices
despite higher product costs. Also, the company had to offer
higher discounts than planned to lure its customers. A shift in
product mix also remained a headwind during the holiday
Though the company is positive about its long term targets and
expects to achieve $1 billion in revenues and net income margin
between 15% and 18% by 2016, it does not foresee the consumer
spending trend to improve in the next few quarters. In fact,
SodaStream expects some of these headwinds to continue into the
first half of 2014, signaling more weakness for the company.
Based in Israel, SodaStream commands a global leadership
position in the home beverage carbonation market. Its soda making
systems, sold mainly under the SodaStream brand, offer a
healthier way to enjoy carbonated beverages at home. SodaStream's
products are primarily sold at retailers like
Bed Bath & Beyond, Inc.
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