Caesarstone Falls Most on Record on Lower U.S. Sales Outlook

  • Revenue outlook for 2015 cut to as low as $495 million
  • Barclays cut stock rating to neutral from buy after report

Shares of Caesarstone Sdot Yam Ltd., the maker of quartz countertops, tumbled the most on record after the company trimmed its 2015 revenue forecast on weaker-than-expected U.S. growth.

Caesarstone plunged 21 percent to $56.39 at 1:17 p.m. in New York after losing as much as 24 percent earlier, wiping out the stock’s gains this year. The Sdot Yam, Israel-based company reduced its 2015 revenue forecast to as low as $495 million, compared with the $521 million average estimate of five analysts surveyed by Bloomberg.

Caesarstone, which was founded on a kibbutz, is the top performing initial public offering out of Israel in the past decade, returning more than 400 percent since it was listed in March 2012. That rally, and weaker U.S. sales growth in the second quarter led Barclays Plc to cut its rating on the shares to the equivalent of neutral from buy on Wednesday.

“Caesarstone’s valuation has already incorporated robust expectations for growth, and thus even a modest deceleration in U.S. sales may limit the stock’s upside in the near term,” Barclays analysts led by New York-based Stephen Kim wrote in an Aug. 5 research note.

Chief Executive Officer Yosef Shiran told investors in a conference call on Wednesday that currency headwinds and the growth of multi-family homes in the U.S., where Caesarstone is not a big player, contributed to the weaker sales outlook.

Caesarstone traded at about 25 times 12-month future earnings on July 31, compared with an average of 18 over the past five years, Bloomberg data show.