Rami Levi Chain Stores Hashikma Marketing 2006 Ltd. advanced the most in more than two weeks as Citigroup Inc. raised its price estimate for the Israeli discount grocer’s shares by 28 percent.
The company’s shares gained 2.9 percent, the most since April 9, to 166.7 shekels at the close in Tel Aviv. Citigroup increased its price outlook to 185 shekels from 145 shekels, reiterating its buy rating, according to a note to investors today. The benchmark TA-25 Index rose 0.6 percent.
Rami Levi, whose profit jumped 17 percent last year, is trading at 14.2 times estimated earnings, according to data compiled by Bloomberg. That compares with 34 times for Istanbul-based discount store operator BIM Birlesik Magazalar AS. Rami Levi, based in Jerusalem, has rallied 31 percent this year.
“The share trades at a discount to fast-growing Central Eastern Europe Middle East & Africa food retailers,” Citigroup analyst Michael Klahr wrote in the note. The company’s market-share gains are “continuing as shoppers are attracted to lower prices, a simple sale message and more employees per meter than competitors,” he wrote.
Revenue of Israel’s second-biggest grocer by market value advanced 26 percent last year to 2.79 billion shekels. Citigroup estimates Rami Levi’s earnings before interest and tax to grow 25 percent this year and in 2014, compared with 23 percent and 17 percent, respectively, for peers.
The company, which has 26 branches across the country, plans to increase the number of stores to 50 by the end of 2015, according to an investor presentation last month.