Nice Ltd. is trading at the highest premium to the largest telecommunication companies listed on the Nasdaq in at least 15 months as investors bet the global economic slowdown will fail to erode demand for compliance and security software.
The Israeli maker of digital surveillance and monitoring systems rose 2.6 percent to $36.07 in New York yesterday after raising this year’s outlook and reporting a profit that beat analysts’ estimates. Nice traded at a 24 percent premium to the Nasdaq Telecommunication Index last week, the biggest since at least August 2010. The Bloomberg Israel-US 25 Index of the largest New York-listed Israeli companies rose 3.1 percent, the most in a week, led by Teva Pharmaceutical Industries Ltd. (TEVA)
Nice is benefiting from rising demand for its technology used to record customer interactions and to provide fraud detection following an increase in data breaches at companies including Sony Corp. and Citigroup Inc. (C) The Ra’anana, Israel- based company raised its outlook for 2011 adjusted earnings yesterday to a range of $2.05 to $2.09 a share from $2 to $2.08 per share.
Nice is seeing “a strong product cycle and stronger adoption trends,” said Daniel Ives, an analyst at FBR Capital Markets in New York who rates the shares “outperform.” “Nice is well positioned to benefit from the improving conditions in the field and is poised to see accelerated top-line bookings growth.”
Nice traded at 16.2 times estimated earnings yesterday, 19 percent above the Nasdaq Telecommunication Index’s 13.7. That compared with an average of 10 for companies on the Bloomberg Israel-US 25 Index.
Nice reported third-quarter earnings of 54 cents a share, above the 52 cents median estimate of eight analysts surveyed by Bloomberg. Revenue in the three months ending September rose 14 percent to $199 million, according to a statement distributed by PRNewswire yesterday.
“We expect a strong fourth quarter,” Chief Financial Officer Dafna Gruber said by telephone from the company’s headquarters. “We’re seeing some pressure and delays on certain deals but so far it didn’t impact our business.”
The company also said that its board authorized a program to buy back as much as $100 million of its shares.
“We want to improve the return to shareholders and have a more efficient balance sheet,” she said.
Nice, which completed the purchase of voice-over software maker Fizzback for about $80 million last week after buying CyberTech International for $60 million in February, will continue to look for other acquisition opportunities, she said.
In 2010, companies lost about $37 billion to online fraud or theft, and 8.1 million U.S. adults had their identities stolen, according to a February report prepared by Javelin Strategy & Research, a Pleasanton, California-based research group.
Sony has said it expects to incur 14 billion yen ($179.4 million) in costs related to an April attack on its entertainment networks that exposed more than 100 million customer accounts.
Teva, the world’s largest maker of generic drugs, gained the most since Aug. 9 on speculation it may start selling a generic version of Pfizer Inc.’s Lipitor anti-cholesterol pill and as it formed a partnership with Procter & Gamble Co.
The New York shares rose 5.1 percent to $41.80. The Tel Aviv shares gained 5.2 percent to 149.10 shekels, or the equivalent of $40.73 shekels.
Teva told analysts in a conference call after reporting earnings that if it manages to introduce an “important undisclosed product” in the fourth quarter, it would meet the upper range of its forecast of earnings excluding some costs of $4.92 to $5.02 a share this year.
“This is ostensibly Lipitor,” Sanford C. Bernstein & Co. analysts led by Ronny Gal wrote in a report late yesterday. “What other product can give Teva 10 cents of earnings per share or $89 million net income in one month?”
Separately, Teva and P&G said a new consumer-health care partnership “has the potential to reach double-digit sales growth and $4 billion in sales towards end-of-decade,” according to a statement distributed by PRNewswire.
Pluristem Therapeutics Inc. (PSTI), the Israeli developer of cell- therapy products, jumped 9.3 percent to $2.71, the biggest gain since July 11. The Tel Aviv shares gained 10 percent to 9.88 shekels, or the equivalent of $2.70.
The company may post its first quarterly revenue next week after it agreed to license its stem cells to United Therapeutics Corp., Chief Executive Officer Zami Aberman said in a phone interview yesterday.
“We will begin to recognize revenue in the first fiscal quarter,” he said. The company has enough cash to sustain its operations until 2014 at current expenditure levels, he said.
Pluristem reported separately that its PLX-PAD cells to treat critical limb ischemia, in which the obstruction of the arteries decreases blood flow to the hands, feet and legs, met all the protocol endpoints.
The Tel Aviv benchmark TA-25 Index gained 0.5 percent to 1.106.52, paring its drop this week to 5.3 percent, the biggest in a month.
The shekel gained 0.2 percent to 3.6594 per dollar yesterday.
Israel, whose population of 7.7 million is similar to Switzerland’s, has about 60 companies traded on the Nasdaq, the most of any country outside the U.S. after China. It is also home to the largest number of startup companies per capita in the world.
Israeli technology companies raised $522 million in capital during the third quarter of 2011, $47 million less than in the second quarter, according to the Israel Venture Capital-KPMG Quarterly Survey released Oct. 24.
The Bloomberg Israel-US 25 Index gained 3.1 percent to 89.42 yesterday in New York.
EZchip Semiconductor Ltd. (EZCH), the Israeli maker of network processors, posted the biggest decline on the benchmark, dropping 2.4 percent to $31.05. The Tel Aviv shares lost 1.9 percent to 113.70 shekels, or the equivalent of $31.08.
The company’s rating was cut to “neutral” from “buy” at Chardan Capital Markets after EZchip said sales may drop as much as 30 percent in the fourth quarter.
Camtek Ltd., the maker of optical-inspection systems, advanced for the first time in four days, increasing 3 percent to $2.18. The Tel Aviv shares gained 4.3 percent to 7.92 shekels, or the equivalent of $2.17.
The company said yesterday that third-quarter revenue rose 24 percent to $29.7 million.
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