Friday, May 04, 2007

Jones Sode (NASDAQ:JSDA): Bounce play

ThinkEquity has some interesting comments on Jones Soda (NASDAQ:JSDA) after the co issued lower than expected Q1 results last night:

- James Maher, the analyst covering JSDA for Think is taking his rating up to Accumulate from Source of Funds noting the co announced 1Q07 results that disappointed on the top line, but suggested better things to come during FY07 as the canned soda rollout continues and high fructose corn syrup inventory is depleted. Gross margin rates improved less during the quarter than the firm had estimated as sales of concentrate ramped more slowly. They believe sales will be stronger in coming quarters and have revised their FY07 estimates accordingly.

Jones Pure Cane Soda in cans is now on track to be on the shelves by Memorial Day at the long list of retail locations the company announced last March. Wal-Mart and Target are among the retailers that already have begun stocking and selling Jones Pure Cane Soda. Firm believes sales growth will be much more robust in Q2 and Q3 as retailers using just-in-time inventory systems begin to re-order.

With new products and substantially larger retail distribution (with more to come), they believe Jones Soda has the opportunity to gain share of very large markets and earn rising returns on its investment. Maintains $26 tgt.

Notablecalls: Must say I was stunned to see the numbers when they hit. Yet, comments by the management on the call made sense. They didn't want to stock the shelves with the fructose products when they are about be pushing the pure-cane lines. It made the Q1 top-line look horrible but the management says they are running things from a 12-month basis rather than a 3-month basis.

The stock ended around $21 in after hours action. I think that if you can pick up some stock around these levels, you'll get a bounce. $0.75 leash.


rushpike said...

After listening to the entire conference call I wonder how many sellers did. The company laid out its longterm strategy with clarity and specific target numbers. All the sellers were short-tern momentum players. I hope they got short since this stock is going much higher.

Ezzyme said...

The cans look less impresive than Shasta or other private label sodas. Tasted at Costco, not impressed. They had it stacked next to Shasta with Shasta half the price. I don't see wide consumer acceptance.