This morning Sodastream International Ltd (NASDAQ:SODA) warned that it will disappoint when it releases its next earnings report toward the end of this month. Analysts from multiple firms are weighing in, but perhaps the harshest view comes from JPMorgan analysts. They cut their price target for the company nearly in half.

Sodastream International Ltd (NASDAQ:SODA) preannounces negative results

Sodastream revealed this morning that it will disappoint on both the top and bottom lines. The company’s preliminary third quarter results were far below Wall Street estimates. Sodastream expects to report $125 million in revenue, compared to the consensus estimate of $154 million. Operating profits are expected to be $8.5 million, compared to Wall Street’s consensus estimate of about $17 million.

The soda machine maker said the reason for the especially weak results in the third quarter was because sales in the U.S. significantly underperformed expectations. Demand for the company’s home soda makers and flavors was especially bad during the quarter.

Sodastream is scheduled to release its full third quarter earnings report on Oct. 29.

Sodastream International Ltd (NASDAQ:SODA) – JPMorgan slashes Sodastream’s price target

In their report dated Oct. 7, 2014, JPMorgan analysts John Faucher, Peter Grom and Sofya Tsinis noted that they though Sodastream management has been aggressive in its estimates for the year. However, they said they were surprised by just how bad it ended up being. As a result, they slashed their price target for the company from $40 to $25 per share. They have a Neutral rating on Sodastream.

They also note that this is the second time in the last four quarters that Sodastream International has released a negative preannouncement ahead of its earnings report. The JPMorgan team said that, based on the numbers the company preannounced, it should post earnings of about 31 cents per share for the third quarter, compared to the consensus estimate of 72 cents per share.

Where Sodastream International Ltd (NASDAQ:SODA)’s real potential lies

The JPMorgan team stopped just short of writing off Sodastream completely, however. They said if investors focus less on U.S. penetration and more on profitability, there would likely be “solid value” if the company can return to prprofitability in the U.S. They believe that Sodastream has a “small but sustainable platform” to sell its flavor canisters, which are “highly profitable.”

Analysts at Deutsche Bank, William Blair and Stifel also have the equivalent of a Neutral or Hold rating on Sodastream, although they seem to be waiting for more information before passing judgment on the company.

In their report dated Oct. 7, 2014, Deutsche Bank analysts Bill Schmitz Jr. and Faiza Alwy maintained their Hold rating and $32 per share price target on Sodastream International. Like the JPMorgan team, they commented on the company’s opportunity in selling canisters. They see “considerable margin potential if the company turns off the spending spigot” and focuses more on refill canisters and flavor syrups, which have higher margins.

Sodastream International Ltd (SODA): An “interesting” idea

The Deutsche Bank team also noted that the company’s management talked about plans to rebrand Sodastream as a “health and wellness solution.” They think this path “seems interesting,” but they point out that consumers want credibility and “authenticity,” which they say the soda machine maker must be aware of.

Management also said they’re looking into other strategic alternatives, and the Deutsche Bank team believes they are also looking for a partner or, potentially, an acquirer.

Other analysts wait on Sodastream’s report

In their report also dated Oct. 7, 2014, William Blair analysts Jon Anderson, Ryan Sundby and Luke Christianson said they’re still waiting to hear Sodastream’s full earnings report on Oct. 29. They have a Market Perform rating on the company’s stock.

Management did say this morning that they will release more on their revised plans later this month, so the William Blair team said they will update their estimates when they hear more.

Sodastream International Ltd (SODA) Tanks - Analysts React
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