SodaStream International Ltd., the Israeli maker of home soda machines that is said to be considering going private, climbed the most in three months after reporting second-quarter earnings that beat analysts’ estimates.
Shares of SodaStream jumped 10 percent to $32.76 in New York, the biggest gain since April 23. The stock surged 9.4 percent on July 24 amid reports that the Lod, Israel-based company is in talks with an investment firm about a buyout. SodaStream was the best performer on the Bloomberg Israel-U.S. Index, which advanced 1.4 percent to 119.98.
The rally in the stock comes as SodaStream is negotiating a transaction that would value it at about $40 a share, Bloomberg News reported July 24. The company’s second-quarter revenue rose 6.6 percent, surpassing 10 analyst estimates compiled by Bloomberg. Better-than-estimated earnings help boost the prospects of a buyout, said Larry Peruzzi, a senior equity trader at Cabrera Capital Markets LLC in Boston.
“Beating earnings is a positive as well as the recent range they have been trading in,” Peruzzi said in an e-mail. “The better second-quarter number has some short covering this morning.”
The amount of stock borrowed to profit from declines in SodaStream shares represented about 21 percent of shares outstanding as of July 29, the highest since early June, according to Markit, a London based provider of financial information.
SodaStream’s second-quarter revenue rose to $141.2 million, surpassing the $140.6 million average of 10 analyst estimates compiled by Bloomberg. Net income fell to 43 cents per share, also beating a mean estimate of 30 cents.
“A good deal of this move is predicated on short covering,” Yousef Abbasi, a market strategist at JonesTrading Institutional Services LLC in New York, said in an e-mail. “It wasn’t a disaster quarter, but it’s difficult to be impressed with the fact that margins continue to shrink.”
The company said it now expects 2014 sales to increase about 5 percent, from a previous forecast of 15 percent. Net income for 2014 will drop about 5 percent, compared with a 3 percent growth projection previously.
SodaStream has plunged 43 percent in the past year after a lackluster holiday season caused the company to miss 2013 earnings estimates and as deep discounts to move a backlog of soda machines squeeze margins. Several private-equity funds have been looking at SodaStream for a leveraged buyout, one person who asked not to be identified because the discussions are private said July 24.