Cellcom Calls Jump on Earnings-Surprise Wagers: Israel Overnight
Options traders are the most bullish on Cellcom Israel Ltd. (CEL) in 13 months on bets the mobile-phone company’s earnings will beat analysts’ forecasts.
The ratio between call options to buy Cellcom’s U.S.-traded stock versus puts to sell rose to 1.444-to-1 on March 2, the highest since Jan. 28, 2011 and up from 1.02 on Jan. 19, 2012. Cellcom lost 1.8 percent yesterday as the Bloomberg Israel-US 25 Index (ISRA25BN) of the largest U.S.-listed Israeli companies fell 0.9 percent to 84.86, a five-week low.
Cellcom, which has slumped 23 percent in New York this year, is cutting staff and buying Internet providers to maintain market share after Israel issued licenses to new mobile-phone operators last year to bolster competition. The Netanya, Israel- based company may report fourth-quarter net income of 100 million shekels ($26.4 million) tomorrow, according to the average of two analysts’ estimates compiled by Bloomberg, from 319 million shekels in the same period of 2010.
“Speculators here are thinking that if there’s an earnings surprise to the upside, there’s going to be a rally, and I want to be a part of that,” Vince Lanci, owner of Echobay Partners LLC, a commodity options-trading firm in Stamford, Connecticut, said yesterday. “Others are saying that they don’t want to own the shares outright, but in the event that the market is oversold, they’re buying calls.”
The number of outstanding call contracts to buy Cellcom shares was 3,313. The June $17.50 calls had 509 contracts outstanding yesterday, the most of all Cellcom options, according to data compiled by Bloomberg.
Cellcom declined 0.4 percent to 49.38 shekels, or the equivalent of $13.01, at 9:50 a.m. in Tel Aviv after its U.S.- traded shares closed at $12.94 yesterday.
Cellcom and Partner Communications Co., Israel’s second- largest mobile-phone company, may benefit should the government force fixed-line providers Bezeq Israeli Telecommunication Corp. (BEZQ) and Hot Telecommunication System Ltd. (HOT) to cut the fees they charge Internet service providers, the Globes newspaper reported yesterday without saying where it obtained the information.
Cellcom’s third-quarter profit tumbled 40 percent to 199 million shekels compared with the same period a year earlier. While Partner decided not to issue a dividend in the second quarter, Cellcom is expected to make a payment of 37 cents a share.
“Investors may not be sure that Cellcom can continue to meet its dividend,” said Jamia Jasper, president of AmerIsrael Capital Management LLC in New York and an adviser to the American Israeli Shared Value Fund. (AISHX) “It’s still possible more players will come into the field seeing as how Cellcom and Partner are struggling to make ends meet.”
Ituran Location and Control Ltd., a maker of systems for locating stolen vehicles, rose 1.9 percent to an eight-month high of $14.71 in New York after the company said it received a favorable ruling from a Brazilian court. The Administrative Court of the State of São Paulo dismissed a revenue services claim against Azur, Israel-based Ituran, the company said in a filing. The shares in Tel Aviv declined 0.2 percent to 56.05 shekels, or the equivalent of $14.77, today.
Ituran will pay a dividend of $1.23 on April 4, according to data compiled by Bloomberg.
“The one risk that Ituran had was that lawsuit,” Andrew Uerkwitz, an analyst at Oppenheimer & Co. in New York said by phone last week. “A clear benefit that they offer shareholders is a very sizable dividend, so this lawsuit was putting downward pressure on the stock. With that gone, they’re shares got a bump up.”
SodaStream International Ltd. (SODA) retreated 7.7 percent yesterday to $37.30, a three-week low. Shares have lost 21 percent since the company said sales of its soda machines grew at 8 percent in the fourth quarter, compared with 60 percent in the previous period.
Israel’s TA-25 Index (TA-25) fell 0.6 percent to 1,086.40 today.
Israel, whose population of 7.8 million is similar in size Switzerland’s, has about 60 companies traded on the Nasdaq Stock Market, the most of any country outside the U.S. after China. The nation is also home to more startup companies per capita than the U.S.
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