Radware Ltd.’s price swings swelled to the highest since 2011 in New York on concern the Israeli maker of network technology will post the slowest annual sales growth in seven years.
Shares tumbled 23 percent to $29.07 on April 5, the steepest slump since 2004, after the company reported first-quarter profit that was at least 10 cents a share below its forecast. The stock’s 60-day volatility quadrupled from a record low to 55.95, according to data compiled by Bloomberg. Radware led declines on the Bloomberg Israel-US Equity Index, which had the biggest drop since November last week.
Radware’s $45 million revenue in the first three months of the year was also below projections as sales from China and the Europe, Middle East and Africa region declined, the Tel Aviv-based company said April 5. The Chinese economy emerged from an almost two-year slowdown last quarter, while Europe is in recession. Analysts predict sales for Radware, whose products help boost network efficiency, will rise 6 percent this year, the slowest pace of growth since 2006.
“They came into the year with a soft portfolio of activity,” Alex Henderson, an analyst at Needham & Co. in New York who rates Radware a buy said by e-mail on April 5. “Radware noted difficulty closing existing customer add-on deals. They are confident they will get business over the course of the year.”
Radware’s trading volume was 20 times the three-month average on April 5 as the stock had the biggest loss among the 130 companies on the Nasdaq Telecommunications Index. The shares are trading at 15.7 times estimated earnings, or 38 percent below its five-year average, data compiled by Bloomberg showed.
Europe, which is Israel’s second-largest trading partner, is in recession amid debt-saddled nations. The euro-zone economy will contract 0.9 percent this quarter, according to the median of 26 economists’ estimates collated by Bloomberg. People’s Bank of China Governor Zhou Xiaochuan said on March 13 the government should be on “high alert” after consumer prices jumped in February, intensifying concern that potential monetary tightening would slow down the economy.
“We were seeing delays in the sales cycle with existing enterprise customers on expansion projects of their existing infrastructure,” Meir Moshe, Radware’s chief financial officer, wrote in an e-mail April 5.
Rival F5 Networks Inc. fell the most in more than two years on April 5 as the maker of data-management equipment based in Seattle reported preliminary quarterly profit and revenue that missed its forecast.
The Bloomberg Israel-US Index of the largest Israeli companies traded in New York fell 1.8 percent last week, with Radware leading the declines. Israel’s benchmark TA-25 Index added 0.2 percent to 1,228.42 in Tel Aviv today.
MagicJack VocalTec Ltd. had the second-biggest gain on the Israel-US index, adding 12 percent for the week to $15.68. The Israeli company, whose founders pioneered voice-over-Internet technology, posted the first annual operating profit since its 1996 listing.
CaesarStone Sdot Yam Ltd. dropped 7.5 percent to $24.41, the largest weekly decline since August. The two biggest investors in the Israeli maker of countertops registered to sell shares.