EZChip Jump Swells N.Y. Premium to 5.3%: Israel Overnight

EZchip Semiconductor Ltd. (EZCH)’s rally in New York last week left the Israeli chipmaker trading at the widest premium to the Tel Aviv stock in 11 weeks while Teva Pharmaceutical Industries Ltd. (TEVA) slumped after a court ruling.

EZchip surged 10 percent, the most in two months, after Juniper Networks Inc. signaled a pickup in demand for routers. Teva, the world’s biggest maker of generic drugs, slipped the most in six weeks July 26 after losing patent protection for its largest branded drug a year earlier than analysts forecast. The Bloomberg Israel-US Equity Index of the most traded Israeli companies in New York dropped 0.7 percent last week.

Demand for routers will improve over the next several quarters as clients ramp up spending to expand networks, Juniper Chief Executive Officer Kevin Johnson told analysts last week. EZchip, which sells its processors to Juniper, Cisco Systems Inc. and ZTE Corp., will post a 5 percent increase in second-quarter sales when it reports Aug. 7, according to the median estimate of eight analysts surveyed by Bloomberg.

“With the service providers beginning to open their purses again in terms of capex investments, that has to be good for EZchip in terms of demand for their product,” Jay Srivatsa, an analyst at Chardan Capital Markets LLC in New York who raised his rating for EZchip to hold from sell on July 24, said in a telephone interview.

EZchip climbed 1.6 percent on July 26, leaving the U.S. shares 5.3 percent above the Tel Aviv stock.

Teva Court Ruling

The U.S. Court of Appeals for the Federal Circuit in Washington upheld four of Teva’s patents on its top-selling multiple sclerosis drug, Copaxone. Other patent claims on the drug were overturned July 26, including one that expires in September 2015. The Petach Tikva, Israel-based company said it will appeal the decision.

Two of Teva’s competitors, Momenta Pharmaceuticals Inc. and Mylan Inc. (MYL), are developing generic versions of the drug. Mylan Chief Executive Officer Heather Bresch said July 26 in a statement the company plans to start sales of generic Copaxone on May 25, 2014. Teva made $1.1 billion in sales in the first quarter from Copaxone.

The Bloomberg Israel-US gauge fell to 95.57 last week, snapping four weeks of gains. The TA-25 Index (TA-25) rose 0.2 percent last week to 1,229.24.

Teva dropped 1.3 percent to $40.73 on July 26, with trading volume more than twice the daily average over the past three months. The shares gained 1.6 percent for the week, closing at a 0.6 percent discount to the Tel Aviv stock.

Mellanox Technologies Ltd., the Israeli maker of equipment that speeds electronic data transfers, posted the biggest weekly retreat on the Bloomberg Israel-US measure, plunging 15 percent to $45.61 in New York. Piper Jaffray Cos. cut its rating for the stock to hold July 25 after Mellanox forecast third-quarter sales of $104 million to $109 million, below analysts’ estimates. The shares closed at a 2.8 percent discount to the Tel Aviv stock.

To contact the reporter on this story: Jessica Summers in New York at jsummers17@bloomberg.net

To contact the editor responsible for this story: Brendan Walsh at bwalsh8@bloomberg.net

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