Ormat’s New Plant Deal May Boost Profit: Israel Overnight
Ormat Technologies Ltd. (ORA), the Reno, Nevada-based unit of an Israeli power plant developer, rose the most in two months in New York on speculation a new building contract will boost earnings per share by the end of 2013.
Shares of Ormat climbed 2.7 percent to $18.78 in the U.S. yesterday, the most since Feb. 24. The Bloomberg Israel-US Equity Index (ISRA25BN) of the largest Israeli companies listed in New York rose for the first time in four days, adding 0.8 percent to 90.61. Mellanox Technologies Ltd. (MLNX) also snapped a three-day slide after Barclays Plc raised its price estimate on the company’s U.S. shares by 18 percent.
Ormat Technologies, 60 percent owned by Yavne, Israel-based Ormat Industries (ORMT) Ltd., won a $61.2 million deal to build a geothermal power plant in North America, according to a PRNewswire statement yesterday. The project, which is expected to be completed by the end of 2013, will boost earnings per share by 30 cents over 2012 and 2013, Avondale Partners LLC said. Analysts expect EPS to rise to 47 cents this year from 40 cents in 2011, according to the median of seven estimates compiled by Bloomberg.
“Aside from the obvious financial benefit, we view this win as a positive as it shows there is incremental business in the U.S. and that Ormat is quite competitive on bids,” Daniel Mannes, a Berwyn, Pennsylvania-based analyst at Avondale wrote in a report e-mailed yesterday.
Ormat Technologies, an engineer and producer of energy- generated power plants, said at the start of the month that it received a contract to build and operate a generator in Kenya.
The company is scheduled to report first-quarter earnings on May 8 and will probably say sales grew 14 percent to $112 million, according to the median of five analysts’ estimates collated by Bloomberg. Revenue increased 33 percent to $124 million for the three-month period ending Dec. 31.
Ormat’s stock has gained 4.2 percent this year, sending valuations to 36 times estimated earnings, more than triple the average multiple for companies on the New York Stock Exchange Composite Index (NYA), according to data compiled by Bloomberg.
Ormat Industries rose 0.7 percent to 18.52 shekels in Tel Aviv on April 24. The Israeli benchmark TA-25 Index (TA-25) has gained 0.9 to 1,162.95 this week. The Tel Aviv Stock Exchange was closed yesterday and will also be closed today.
The country, whose population of 7.8 million is similar in size to Switzerland’s, has about 60 companies traded on the Nasdaq Stock Market, the most of any nation outside the U.S. after China. Israel is also home to more startup companies per capita than the U.S.
‘Tip of the Iceberg’
Mellanox, a maker of technology used to transfer and store data quickly, added 1.7 percent to $56.44 in New York, paring a loss of 9.8 percent in the past two days. The company’s Tel Aviv stock rose 1.1 percent to 226.50 shekels, or the equivalent of $60.38.
Mellanox jumped 52 percent in New York on April 19 after forecasting second-quarter sales that beat analysts’ estimates.
Shares of the Yokneam Elit, Israel-based company will probably rise to $65 in the next 12 months, up from a previous estimate of $55, Barclays said.
“A significant percentage of the move has been driven by investors who believe that the second-quarter guidance is just the tip of the iceberg,” Joseph Wolf, a Tel Aviv-based technology analyst at Barclays, wrote in the report.
Revenue for the three months ending June 30 will probably be between $125 million and $130 million, Mellanox said on April 19, exceeding the $83.4 million median estimate of 10 analysts surveyed by Bloomberg.
EZchip Semiconductor Ltd. (EZCH) rose after dropping the most in two years on April 24, adding 0.6 percent to $39.52. The chip developer’s Tel Aviv shares retreated 0.8 percent on April 24 to 164.30 shekels, or the equivalent of $43.80.
Shares of the Yokneam, Israel-based company sank 9.3 percent on April 24 on concern 2012 sales will suffer after competitor Broadcom Corp. (BRCM) debuted a similar product.
Though the new processor may boost competition for EZchip, the company is “well positioned to grow revenue and earnings by three to four times in coming years,” Daniel Meron, an analyst with RBC Capital Markets, wrote in an April 25 report. The stock decline “may provide a buying opportunity,” he said.
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