Tech Earnings Surprise Spurs Biggest 2012 Gain: Israel Overnight

Israeli stocks traded in New York had the biggest weekly advance this year as better-than- estimated earnings for technology companies bolstered Mellanox Technologies Ltd. (MLNX) and Check Point Software Technologies Ltd.

The Bloomberg Israel-US Equity Index (ISRA25BN) of the largest Israeli companies listed in the U.S. jumped 5 percent in the week to 91.91, the biggest five-day climb since Dec. 2. Yokneam Elit, Israel-based Mellanox surged 50 percent, swelling the premium over its Tel Aviv shares to $6.10, the most on record. Check Point posted its biggest advance in five weeks before reporting first-quarter earnings tomorrow. Mellanox shares surged in Tel Aviv today.

Average profit for about 10 percent of companies on the Nasdaq Composite Index that have reported first-quarter results -- from Mellanox to the world’s biggest software maker Microsoft Corp. (MSFT) -- is beating analysts’ median estimates by 6.7 percent, according to data compiled by Bloomberg. Israeli companies, the biggest source of listings on the Nasdaq Stock Market after China, are benefiting from the benchmark index’s best start to a year since 1991 as concerns Europe’s debt crisis will worsen recede, according to Bank Leumi USA.

“Tech has really soared and I think that Israeli stocks are getting some attention,” Chaim Fromowitz, head of the private banking division at Bank Leumi USA, a unit of Israel’s largest lender by assets, said in a phone interview on April 20 in New York. “With the general move in the global economy, the market here is more positive and that’s overflowing.”

Record Sales

Mellanox, a maker of technology used to transfer and store data quickly, said on April 18 that sales increased to a record $88.7 million in the first quarter, beating the $81.5 million median of 10 analysts’ estimates compiled by Bloomberg. Mellanox forecast second-quarter revenue of between $125 million and $130 million, exceeding the $83.4 million median analysts’ estimate.

Chief Executive Officer Eyal Waldman said in an interview on April 19 that the company’s revenue will keep increasing after shares soared 52 percent that day.

“We can continue to grow,” Waldman said by phone from Sunnyvale, California. “Every time there’s a technology that can provide better efficiency and better utilization, people will migrate to use it.”

Mellanox’s shares in Tel Aviv rose 10 percent to a record 229 shekels, or the equivalent of $61.06, at the 4:30 p.m. close. The benchmark TA-25 Index gained 0.8 percent to 1,161.74.

Check Point Results

Microsoft, based in Redmond, Washington, reported on April 20 fiscal third-quarter earnings of 60 cents per share, surpassing the 58 cents median of 30 analysts estimates collated by Bloomberg.

Tel Aviv-based Check Point (CHKP) will probably say tomorrow, before the start of trading in New York, that first-quarter adjusted earnings rose 20 percent to 72 cents per share, according to the median of 29 analysts’ estimates.

The world’s second-largest maker of equipment designed to keep company Internet networks secure climbed 2.5 percent last week to $64.05. Citigroup Inc. raised its price estimate on shares of Check Point to $74 from $68.

“You have such a large concentration of tech companies in Israel,” Bank Leumi USA’s Fromowitz said. “There’s a general feeling that Israeli stocks have some hidden value.”

U.S. stocks posted their first gain in three weeks as the Standard & Poor’s 500 Index (SPX) climbed 0.6 percent. The Nasdaq Composite (CCMP) jumped 19 percent in the first quarter, the largest advance for the first three months of a year since 1991.

Protalix Approval

Protalix BioTherapeutics Inc. (PLX), a Carmiel, Israel-based biopharmaceutical company, climbed 8.5 percent to $6.95 last week, the highest level in nine months. Protalix shares jumped 16 percent to 28 shekels, or the equivalent of $7.47, in Tel Aviv today.

The company is developing a protein known as taliglucerase alfa with Pfizer Inc. (PFE) using plant cells to replace an enzyme missing in people with Gaucher disease, a genetic ailment that affects as many as one in 50,000 people in the U.S., according to the National Center for Biotechnology Information.

Regulators in Europe may approve Protalix’s treatment on May 25, Brian Abrahams, a New York-based analyst at Wells Fargo Securities, wrote in an e-mailed note on April 20.

Internet Gold-Golden Lines Ltd. (IGLD), which controls Israel’s biggest landline phone company, was the second-biggest gainer on the Bloomberg US-Israel Equity Index. The shares in Tel Aviv fell 4.1 percent today to 22.85 shekels, or the equivalent of $6.09, after climbing 19 percent to $6.40 last week in New York.

Internet Gold jumped on speculation a new government policy will allow Bezeq Israeli Telecommunication Corp. to integrate its units and cut costs. Internet Gold owns 31 percent of Bezeq through a unit.

To contact the reporter on this story: Tal Barak Harif in New York at tbarak@bloomberg.net

To contact the editor responsible for this story: Emma O’Brien at eobrien6@bloomberg.net

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