Partner Exceeds Price Bets on Outlook: Israel Overnight

Partner Communications Co. (PTNR), Israel’s second-largest mobile phone provider, is beating analysts’ average share price estimate by the most since 2010 on prospects the company will report record sales growth this week.

American depositary receipts of Partner gained 1.4 percent in New York to $8.11, the highest since February 2012, to trade at a premium to the shares in Tel Aviv for the first time in eight days. The Israel shares today widened the gap, slipping 1.3 percent to 28.66 shekels, or $7.98, at the close in Tel Aviv.

Partner’s share premium versus the average analyst target price reached 6.28 shekels ($1.75) last week, the highest level since 2010, according to data compiled by Bloomberg. The gap was the third-biggest among telecommunication companies in the Middle East and Africa, the data show. The Rosh Ha’Ayin, Israel-based company is scheduled to report earnings on Aug. 28, less than two weeks after Cellcom Israel Ltd. (CEL) said average revenue per user increased for the first time in three years.

“The market expectation is that Partner’s second-quarter earnings report is going to be as strong as Cellcom’s,” Gilad Alper, a senior analyst at Ramat-Gan, Israel-based Excellence Nessuah Brokerage Ltd., said by phone Aug. 23. “There is a sentiment change in the market because the industry is getting ready to improve.”

The Bloomberg Israel-US Equity Index of the most-traded Israeli stocks in New York fell 0.1 percent to 97.47, trimming its gain for the week to 0.1 percent. The gauge rose for the first time in three weeks, led by Prolor Biotech Inc., which advanced 7.3 percent, while Mellanox Technologies Ltd. (MLNX) fell 5.9 percent. The benchmark TA-25 Index of equities today slipped 0.2 percent.

Price Estimate

The ADRs have outperformed analysts expectations for a third month in New York, data compiled by Bloomberg show. The consensus target price on Partner’s stock is 22.86 shekels, according to the mean estimate of 11 analysts, a 21 percent discount to the Aug. 22 closing price of 29.03 shekels.

“This means the analysts will probably upgrade the stock and the gap will close,” Bloomberg Industries analyst Erhan Gurses said by phone from London Aug. 23. “Investors have been more optimistic about the stock than the analysts.”

The company is expected to say that second-quarter net income before special items was 43.4 million shekels ($12.4 million), a 64 percent drop from the year-ago period, according to the mean of three analyst estimates compiled by Bloomberg. Revenue increased 42 percent to 2.02 billion shekels, according to the survey.

Cellcom’s Gain

Cellcom’s average revenue per user increased 3.8 shekels in the three months through June compared with the previous quarter, the first advance in three years, it said in a statement Aug. 19. Net income slumped 45 percent to 66 million shekels. The company, the second-best performer on the TA-25 index this year with a gain of 36 percent, advanced 5.3 percent to a 15-month high of $11.72 in New York last week.

Prolor Biotech Inc. (PBTH), which is developing a long-acting version of human growth hormone that’s in the final stage of clinical trials, rose 1.3 percent to $7.98 in New York Aug. 23, expanding its gain last week to 7.3 percent. The Tel Aviv shares today advanced 2.1 percent to 28.91 shekels, or $8.05.

Protalix BioTherapeutics Inc. (PLX) gained 3.4 percent last week to $5.20, settling at a 1.6 percent premium to the company’s shares in Tel Aviv. The Israel shares today advanced 0.4 percent to 18.42 shekels, or $5.13.

Alon Blue Square Israel Ltd. (BSI) settled at a 2.8 percent discount to the company’s shares in Tel Aviv after losing 3 percent in New York last week to $3.51. The Israel shares today declined 1 percent to 12.82 shekels, or $3.57.

To contact the reporter on this story: Halia Pavliva in New York at hpavliva@bloomberg.net

To contact the editor responsible for this story: Tal Barak Harif at tbarak@bloomberg.net

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