Why SodaStream Shares Popped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of SodaStream International (NASDAQ: SODA  ) were bubbling higher today, gaining as much as 11% after getting a strong vote of confidence from Barclay's.

So what: Shares of the countertop soda-machine maker topped $70 momentarily as the British bank lifted its price target 82% to $100. Analyst David Kaplan projected EPS of $2.55 and $3.28 this year and next, slightly higher than the analyst consensus, and also said that estimates for 20% top-line yearly growth in 2013 and 2014 are not factored into the current share price. SodaStream itself has projected sales to top $1 billion by 2016 from just $436 million last year.

Now what: Today's announcement was just the latest piece of bullish news for SodaStream, which is now up more than 50% this year. The stock has been on a roll since reporting earnings nearly a month ago, beating top- and bottom-line estimates, as well as lifting its yearly outlook. I'm a big fan of the razor-and-blade model and even own shares myself, but the share appreciation may be getting a little ahead of itself. The stock crashed two years ago after management issued conservative guidance, and SodaStream still has plenty of naysayers, with 43% of shares sold short. If shares continue to gain significantly this year for no fundamental reason, that may be a clear signal to sell.

For more on SodaStream, I recommend picking a copy of our premium research report all about the soda-maker. This analysis features an in-depth look at the company's opportunities and risks, and lets you know the key areas to watch. Best of all, it comes with a year's worth of free updates to keep you in the know as this upstart continues to disrupt the beverage industry. To get access now, all you have to do is click right here.


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