Piper Jaffray is increasing their tgt on Jones Soda (NASDAQ:JSDA) to $31 from $18 saying margin expansion is driving the model as the company potentially achieves 30% ACV in FY07 and 50% in FY08 of its premium private label brand. Firm believes that the initial pipeline fill is shipping and being shelved (targeted goal of Memorial Day) as expected.
The potential 2H07 "risk" remains as a sell-through period versus the 1H07 channel fill, which may be offset by marketing initiatives. The company continues to invest in human capital, most recently hiring Mr. Peter Burns as SVP of Sales/Marketing.
Piper expects Jones Soda to also invest in its brand through product line launches or extensions, over time.
They are maintaining their FY07 EPS estimate of $0.21. They are also increasing their FY08 EPS estimate by $0.10 to $0.45 based on total revenue growth of 40.8% to $69.4 million versus $63.0 million prior (and conservatively flat gross margin). Reiterates Outperform.
Notablecalls: Oh boy, this is going to be interesting. The valuation is sky high but note there is around a 5 million share short position in the name (20% short interest). The shorts have been squeezed hard over the past couple of weeks and I suspect they will fight hard to counter the positive comments from Piper.
If I were among the shorts in this name, I would surely do my best to chop this one down today, possibly toward negative territory.