SodaStream (SODA) Risk-Reward 'Uncertain at Best' - Deutsche Bank

Deutsche Bank maintained a Hold rating on SodaStream International (NASDAQ: SODA) with a price target of $18. Comments follow Q1 results. Analyst Bill Schmitz Jr said risk-reward for the stock was "uncertain, at best."

"Company is in the midst of a transition as door count for existing products is rationalized in the face of falling consumer demand, particularly in the US. Local currency trends in Western Europe (+5%) remain decent but overall model is a black hole given lack of details around the launch of a new "sparkling water" maker product this year with uncertain retailer and consumer acceptance," said Schmitz.

"Like most other successful growth ideas in the US housewares industry, sustainability of demand and distribution is often dubious after the initial push and that is where SodaStream finds itself. As Coke-backed Keurig Green Mountain makes a big push in the category with an unproven but simpler carbonation system, it’s unclear if retailers are going to want to keep more than one product on shelf. While a shift to health & wellness is on trend, consumers demand authenticity, and here addressable market is substantially smaller. In our view, there is a compelling opportunity to cut costs, shift mix to consumables to optimize profits, but, this shift is unlikely in the short term," added the analyst.

For an analyst ratings summary and ratings history on SodaStream International click here. For more ratings news on SodaStream International click here.

Shares of SodaStream International closed at $19.11 yesterday.

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