Bezeq Israeli Telecommunication Corp. (BEZQ) gained the most in more than two weeks after Clal Finance Brokerage Ltd. raised its recommendation on the country’s largest telecommunications company.
The shares climbed 2.5 percent, the biggest advance since Jan. 16, to 6.49 shekels at the 4:30 p.m. close in Tel Aviv. A 35 percent slump over the past year has left Bezeq shares valued at 8.1 times estimated earnings. That compares with 11.4 times for the MSCI Emerging Markets/Telecommunication Services Index.
“At the current price, the fear of regulation and the negative forecasts for the cellular activities are priced in,” Tsahi Avraham, an analyst at Clal Finance Brokerage Ltd. in Tel Aviv wrote in an e-mailed report today. He raised his recommendation on the shares to “outperform” from “market perform,” while lowering the price estimate to 7.40 shekels from 7.90 shekels.
The government, seeking to boost competition, is introducing new wireless operators and has plans to allow a third fixed-line company into the market, while reducing the fees Bezeq can charge for calls between networks.
Bezeq also has “strong free cash flow and a technological advantage over competitors,” Avraham said.
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