UPDATE: Deutsche Bank Downgrades SodaStream to Hold on Compelling Penetration/Mix Opportunity

In a report published Thursday, Deutsche Bank analyst Bill Schmitz Jr. downgraded the rating on SodaStream International

from Buy to Hold, but raised the price target from $56.00 to $68.00. In the report, Schmitz noted, “Company continues to expand household penetration and improve mix through sales of margin accretive flavors and CO2 canister refills, especially in the core US market. However, as base gets bigger and company laps big distribution gains, growth driven upside becomes less certain. Given the aforementioned and noting bullish analyst meeting commentary, we are downgrading to Hold, raising price target to $68 (from $56). Company discussed its 2016 targets of $1 billion in revenues, 56% gross margin, 18-21% operating margin and 15-18% tax rate which implies a 2016 EPS range of $6.89-8.33 (assuming no incremental share offering or repurchase), well above our prior 2016 EPS estimate of $4.85 (current DBe: $6.80). Expansion through 2016 assumes ~5% US household penetration, continued partnerships on both the syrup and appliance fronts and increased CO2 exchange locations in the US which will drive usage. Innovation efforts will focus on health & wellness, ease of use and better taste/variety.” SodaStream International closed on Wednesday at $63.05.