Social Media Security Deals Spur Radware Rally: Israel Overnight
Stock Chart for RADWARE Ltd (RDWR)
Radware Ltd. (RDWR), the Israeli technology company trading at double valuations relative to the Nasdaq telecommunications index, rose to a two-week high in New York after receiving orders from social networking companies.
Shares of the Tel Aviv-based company climbed 0.9 percent to $37.26 yesterday, pushing valuations to 40 times reported earnings, twice the average multiple for companies on the Nasdaq Telecom Index, according to data compiled by Bloomberg. Prolor Biotech Inc. (PBTH) led declines on the Bloomberg Israel-US Equity Index. (ISRA25BN) The gauge for the largest Israeli companies traded in New York fell 0.1 percent to 89.12.
Radware, whose 27 percent gain this year has outperformed the Nasdaq index’s rise, is benefiting from mounting demand for security software after Sony Corp. and Citigroup Inc. were targets of cyber attacks. Two U.S.-based social networking companies will buy the technology in deals valued at “multi- million” dollars, Radware said in a statement distributed by PRNewswire yesterday, without identifying the buyers or disclosing the exact amount.
“Their solutions are becoming more critical,” Ashok Kumar, an analyst at Maxim Group LLC who has a buy rating on the shares, said by telephone from San Francisco. Radware’s entrance into the social media industry is “expanding the opportunities for the company,” he said.
Radware’s shares may rise to $40 in the next 12 months, Kumar wrote in an April 16 research report. They gained 12 percent in New York last month.
U.S. companies would have to boost cyber-security spending to a group total of $46.65 billion, more than eight times the current $5.3 billion, to achieve security capable of stopping 95 percent of attacks by hackers, according to a Bloomberg Government study published Jan. 30.
Sony, Japan’s biggest consumer-electronics exporter, was last year the target of online data breach when an attack compromised more than 100 million customer accounts.
Citigroup, the third-largest U.S. bank, said about 3,400 customers lost about $2.7 million when their credit-card information was breached by hackers last year.
Radware’s social media deals “signal an acknowledgment that more U.S. businesses are seeing the value in our offerings and have the confidence in our security solution to make them a critical component of their network security plans,” Meir Moshe, the company’s chief financial officer, said in an e- mailed response to questions yesterday.
Radware last year announced a partnership with Sunnyvale, California-based Juniper Networks Inc. (JNPR), a provider of infrastructure solutions and telecommunication services.
The partnership will boost Radware’s share of the equipment market that helps networks run efficiently, according to Maxim’s Kumar.
“We expect the Juniper relationship to contribute up to $10 million in the first year and expand in the years beyond,” said Kumar, who projects it will also result in a 10-cent per share increase in earnings for investors, according to the April 16 note.
Radware will probably report a record $191 million in revenue this year, according to the median estimate of four analysts surveyed by Bloomberg.
The Israel-US Equity Index has advanced 9.7 percent this year, compared with a gain of 16 percent for the Nasdaq Composite Index. (CCMP) The Nasdaq and the Standard & Poor’s 500 Index fell 0.4 percent in New York yesterday as quarterly earnings from Intel Corp. and International Business Machines Corp. disappointed investors.
Telecommunication providers Internet Gold-Golden Lines Ltd. (IGLD) and Cellcom Israel Ltd. (CEL) led gains on the Israel-US Equity Index yesterday. Internet Gold, the company that controls Bezeq Israeli Telecommunication Corp., rose 3.6 percent to $6.40 in U.S. trading. The shares in Tel Aviv fell 2.7 percent to 23.83 shekels, or the equivalent of $6.34.
Cellcom, the country’s largest mobile-phone services provider, climbed 4.7 percent to $12.20 in New York. The Netanya, Israel-based company declined 1.9 percent to 45.10 shekels, the equivalent of $11.99, in Tel Aviv today. The benchmark TA-25 index rose 0.9 percent.
Concern that Israel will force telecommunication providers to cut fees and encourage new players in the mobile-phone market has kept telecom stocks down in Tel Aviv this year. The companies jumped yesterday following a report in newspaper Globes that the government may bar competitor Hot Telecommunication System Ltd. (HOT) from offering a services package.
Mellanox Profit Doubles
Mellanox Technologies Ltd. (MLNX), the Israeli maker of technology used to transfer data quickly, said profit more than doubled in the first three months of 2012, compared to a year earlier, according to a Business Wire statement yesterday after the market closed.
Net income excluding certain items was $22 million, more than twice the $9 million recorded in the first quarter of 2011. Sales increased to $89 million from $55 million a year earlier, the Yokneam Elit, Israel-based company said.
Mellanox rose to $52.50 as of 5:50 p.m. in New York yesterday following the close of the markets after falling 0.3 percent to $43.33 in New York at the close. The shares in Tel Aviv jumped 26.8 percent to 207.80 shekels, the equivalent of $55.26, today.
Israel, whose population of 7.8 million is similar in size to 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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