ADRs Best Weekly Gain Since 2008 Led by Allot: Israel Overnight
Israeli stocks listed in the U.S. posted their biggest weekly gain in almost three years, led by Allot Communications Ltd. (ALLT), on growing speculation technology company profits will improve on demand for smartphones.
Allot, Israel’s biggest maker of high-speed networking equipment, advanced 22 percent to $12.93, leading the increase in the Bloomberg Israel-US 25 Index of the largest Israeli companies traded in New York. Allot surged 14 percent to 47.10 shekels, or the equivalent of $12.88, at 9:56 a.m. in Tel Aviv. Israel’s benchmark TA-25 Index, trading for the first time since Oct. 11, rose 3.4 percent to 1,121.41. The Israel-US 25 climbed 6.3 percent last week, the biggest weekly surge since October 2008.
Israeli technology companies, which raised $569 million in capital during the second quarter, the most in two years, are benefiting from rising Internet traffic and increased online video streaming. Allot will report adjusted third-quarter earnings on Nov. 1 of 10 cents per share, according to the median estimate of eight analysts surveyed by Bloomberg.
“Companies that have good exposure to robust businesses such as smartphones’ suppliers, those are the ones that will be holding on well,” said Jay Srivatsa, an analyst at Chardan Capital Markets LLC in New York.
Twenty-four of the 25 companies in the Bloomberg Israel-US 25 Index gained last week as the measure beat the Standard & Poor’s 500 Index’s 6 percent advance. Global stocks rallied on Oct. 14, extending the biggest weekly rally since July 2009, as the Group of 20 began talks to tame Europe’s debt crisis and U.S. retail sales and Google Inc.’s results beat estimates.
Hundreds of people in cities from New York to London and Tokyo lined up overnight at Apple Inc. (AAPL)’s stores to snap up the company’s newest iPhone on Oct. 14. The device sold out for pre- order at AT&T Inc., Verizon Wireless and Sprint Nextel Corp. a day before it officially went on sale, according to the carriers’ websites.
Allot of Hod Hasharon, Israel, whose customers include Virgin Media Inc. (VMED) and billionaire Carlos Slim’s fixed-line carrier, Telefonos de Mexico SAB, developed a technology that allows Internet providers to differentiate network traffic and provide tailored plans to their clients as demand for faster data surges.
“Allot’s business is exposed to the high-growth service provider mobile infrastructure market,” Catharine Trebnick, an analyst at Northland Securities Inc. in Minneapolis, wrote in an e-mailed report dated Oct. 12. Trebnick rated Allot’s shares “outperform” in her initial coverage of the company.
Before today, the company’s Tel Aviv shares were at a discount of $1.57 to the New York shares, the biggest among the largest Israeli companies traded in the U.S.
EZchip Semiconductor Ltd. (EZCH) increased 1 percent to 126.50 shekels, or the equivalent of $34.60. The maker of network processors that counts Cisco Systems Inc. as a customer rallied 5.9 percent to $34.31 in the U.S. last week.
EZchip, based in Yokneam, Israel, will report third-quarter adjusted earnings per share of $0.32, according to eight analysts surveyed by Bloomberg.
Check Point Software Technologies Ltd. (CHKP), the world’s second- largest network-security company, rose 5.1 percent to $58.89 last week, the highest level in more than 10 weeks.
The company will report profit of 70 cents per share in the third quarter, according to the median estimate of 24 analysts surveyed by Bloomberg.
“Check Point represents one of the most compelling mid-cap stocks in our coverage,” Philip Winslow, an analyst at Credit Suisse in New York, wrote in an e-mailed report dated Oct. 13, ahead of the company’s third-quarter earnings announcement on Oct. 18. “Check Point continues to benefit from network refreshes, pent-up demand from an aging firewall hardware installed base, and a growing pipeline for the company’s software blades.”
The amount of capital raised by Israeli technology companies during the second quarter of 2011 was up from $343 million in the same period last year, according to the Israel Venture Capital-KPMG Quarterly Survey released July 13.
Israel, whose population of 7.7 million is similar to Switzerland’s, has about 60 companies traded on the Nasdaq stock market, the most of any country outside North America after China. It is also home to the largest number of startup companies per capita in the world.
The nation’s stock market was upgraded to developed market status by MSCI Inc. in May 2010, the same month the 63-year-old country was accepted to the Organization for Economic Cooperation.
Technology companies that rely on enterprise and government spending may not be able to weather the global economic slowdown, Srivatsa said.
RADVision, the maker of video-conferencing systems, said it expects revenue of $17 million to $17.5 million, below the previous forecast of $19 million, because of “challenging economic conditions” and stronger competition.
AudioCodes, whose technology enables Internet phone calls, reduced its sales forecast to as little as $155 million this year from $174 million because of “lower-than-anticipated technology, government and residential business.”
Israeli inflation eased in September as food costs declined following consumer protests and end-of-summer sales that brought down apparel prices, the Central Bureau of Statistics in Jerusalem reported on Oct. 14.
Annual inflation slowed to 2.9 percent from 3.4 percent, according to the report. Food prices declined 1.3 percent on the month, while fruit and vegetable prices fell 5.3 percent.
Prime Minister Benjamin Netanyahu’s cabinet approved a program on Oct. 9 that aims to ease the cost of living after rallies brought hundreds of thousands of protesters onto the streets.
The demonstrations and boycotts, which started in June over the cost of cottage cheese, prodded Tnuva Food Industries Agricultural Co-Op In Israel Ltd., which controls about 70 percent of the dairy market, to cut recommended selling prices by as much as 15 percent earlier this month. Competitor Strauss Group Ltd. followed with reductions of 12 percent on some of its milk products.
Teva Pharmaceutical Industries Ltd. (TEVA), the world’s largest maker of generic drugs, gained 3.1 percent to 144.50 shekels, or the equivalent of $39.53. The shares advanced 6.6 percent to $39.17 in New York last week.
Teva won European approval for its $6.2 billion acquisition of Cephalon Inc., the final regulatory hurdle for the deal, after agreeing to divest the right to sell a generic drug in France.
Mellanox Technologies Ltd. (MLNX), the adapter maker that’s part owned by Oracle Corp., lost 3.4 percent to 125.60 shekels, or $34.36, today. The shares gained 2.1 percent in the U.S. last week to $34.34.
MagicJack VocalTec Ltd., the company whose founders invented the technology for making phone calls over the Internet, dropped 1.8 percent last week and was the only company among the 25 largest Israeli companies traded in New York that fell.
MagicJack was added to the Bloomberg Israel-US 25 Index last week after Ness Technologies Inc. was delisted.
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