Options traders are boosting bets by the most in 10 months that SodaStream International Ltd. will extend gains as analysts predict the maker of soda machines will report a 21 percent jump in fourth-quarter net income.
The ratio of outstanding calls to buy versus puts to sell rose to 1.89-to-1, the most since April 25, and up from 1.12-to-1 last month. Shares of the Airport City, Israel-based company climbed 5.4 percent yesterday to $47.50, the highest level since Aug. 15. The Bloomberg Israel-US 25 Index of the largest Israeli U.S.-listed companies fell 0.2 percent to 85.69, led by Alon Holdings Blue Square-Israel Ltd.
SodaStream will probably report today that adjusted net income surged to 4.23 million euros ($5.69 million) in the fourth quarter, up from 3.48 million euros in the same period last year, according to the median estimate of five analysts surveyed by Bloomberg. The maker of homemade soda machines that appeared on the cover of Bed Bath & Beyond Inc.’s Christmas circular, benefited from rising sales last quarter in the U.S., said Jim Chartier, an analyst at Monness Crespi Hardt & Co.
“Most people think the fourth quarter was good in the U.S. as the machines seem to have been given as top gifts,” Chartier, who has a “buy” rating on the shares, said by phone in New York. The stock is also gaining on speculation that “guidance they will give for 2012 will beat street expectations,” he said.
Since the last options expiration on Feb. 17, six of the 10 contracts with the biggest increase in ownership were calls. March $50 calls, with a strike 5.3 percent above yesterday’s close, added 1,747 options to 2,637, data compiled by Bloomberg show. Those contracts were the most traded yesterday.
Calls give investors the right to buy a security for a certain amount, the so-called strike price, by a set date. Puts convey the right to sell. Investors use options to guard against fluctuations in the price of securities that they own, to speculate on share-price moves or to bet that volatility, or stock swings, will rise or fall.
Options traders are pushing the cost of Sodastream calls versus puts to an almost five-month high. Contracts 10 percent above the current stock price cost 0.9 times puts trading 10 percent below, according to data on three-month options compiled by Bloomberg. The price relationship touched 0.96 on Feb. 27, its highest level since October.
Analysts surveyed by Bloomberg predict that SodaStream’s fourth-quarter sales will exceed the company’s guidance of 62 million euros because of a surge in demand for the machines, which retail from $99.99 at Bed, Bath & Beyond, during the Christmas season. The Israeli company will probably report a 27 percent jump in revenue to 63.7 million euros, according to the average estimate of seven analysts surveyed by Bloomberg.
SodaStream also gained on speculation that higher-than-expected profit for Green Mountain Coffee Roasters Inc. will translate into increased earnings for the soda machine maker, Chartier said. The maker of coffee machines surged 24 percent on Feb. 2, the day after it reported net income in the three months to Dec. 24 rose to $104.4 million, from $2.41 million a year earlier.
Like Waterbury, Vermont-based Green Mountain, SodaStream benefits from the so-called razor blade model of retailing, where customers are repeatedly required to buy complementary products such as gas tanks and flavor pouches. The 120-day correlation of gains or losses in the shares climbed to a record 0.45 on Feb. 22, signaling the companies are moving in tandem. It was at 0.43 yesterday.
“When they reported the stock surged more than 20 percent, so you could have people looking for a similar move for Soda,” Chartier said.
N.Y. Beating Tel Aviv
SodaStream shares have gained 138 percent since the company raised $109 million in a November 2010 initial public offering.
Israel, whose population of 7.8 million is similar in size to Switzerland’s, has about 60 companies traded on the Nasdaq Stock Market, 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.
Israel’s benchmark TA-25 Index advanced 1.5 percent today to 1,081.35 at the 4:30 p.m. close in Tel Aviv. The measure has lost 0.4 percent this year, underperforming the 5.5 percent advance in the Bloomberg Israel-US 25 Index. The shekel gained 0.4 percent to 3.7666 a dollar at 4:37 p.m. in Tel Aviv.
Blue Square, Israel’s second-largest food retailer, fell 5.1 percent to $3.56 in New York, a record low. The shares in Tel Aviv declined 1.7 percent today to 13.52 shekels, or the equivalent of $3.59.
MagicJack VocalTec Ltd., the Israeli company whose founders invented the technology used to make telephone calls over the Internet, surged 5.8 percent to $19.57. The Netanya, Israel-based company said it will report revenue climbed $3.2 million in the first quarter of 2012 following the implementation of pre-paid billing rules during this period.
Teva Pharmaceutical Industries Ltd., the world’s largest maker of generic drugs, climbed 1.3 percent to $44.97. The shares advanced 1.6 percent to 169.40 shekels, or the equivalent of $44.98, in Tel Aviv today. A unit of the Petach Tikva, Israel-based company received approval from the U.S. Food and Drug Administration to sell preservative-free methotrexate, a treatment for cancer.