Deutsche Bank Upgrades SodaStream International (SODA) to Buy

Deutsche Bank upgraded SodaStream International (NASDAQ: SODA) from Hold to Buy with a price target of $40 (down from $50).

The firm comments, "With the stock off considerably over the last several weeks, we are stepping in as valuation has become attractive enough to get us comfortable that the downside case is limited here, even based on conservative US household penetration and usage assumptions."

While the firm is trimming CY12 EPS from EUR1.40 to EUR1.18, they believe the valuation fully accounts for their model changes and "compelling upside exists in the name at these levels."

Deutsche Bank said trading at roughly 1x PEG, valuation is compelling and the valuation is more than discounting uncertainty surrounding US household penetration rate and usage patterns.

The firm noted that channel checks weaker than a few months ago, but still good.

"We recently conducted channel checks at several SodaStream retailers, updating our last set of channel checks from July 2011. We note that, while the checks were decidedly more mixed this time around, most of the negative feedback came from Kohl’s (NYSE: KSS), which has always been a troublesome customer for the company. It is important to note that the checks were still largely positive, with the recent pullback in the stock price more than accounting for any weakness at particular accounts."

For more ratings news on SodaStream International click here and for the rating history of SodaStream International click here.

Shares of SodaStream International closed at $29.12 yesterday.

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