Allot U.S. Drop Swells Tel Aviv Premium: Israel OvernightLeslie Picker
Allot Communications Ltd. dropped to the lowest level in more than a year in Tel Aviv today after speculation the European recession is limiting orders sent the Israeli company’s U.S. stock lower.
Shares of Allot, which makes technology used by telecommunications providers to track wireless traffic, declined 4 percent to 46.5 shekels, or the equivalent of $12.77, the lowest level since October 2011, at the close in Tel Aviv. Allot resumed trading on the Tel-Aviv Stock Exchange after the two-day holiday at a premium of 58 cents to the U.S., from 38 cents a week ago, data compiled by Bloomberg show.
Allot has announced two product orders in 2013, fewer than is needed for a “healthy quarter,” according to Needham & Co., which rates the stock buy. The Hod Hasharon, Israel-based company got four orders in 2012, according to its website, as the euro-area economy shrank 0.6 percent amid its debt crisis. Europe accounted for 38 percent of Allot’s revenue in 2012.
“Those two orders on a standalone basis don’t move the needle very much,” Matthew Robison, an analyst at Wunderlich Securities Inc. in San Francisco who rates Allot hold, said by phone yesterday. “We may be looking at another six months before the backlog starts to build again.”
The U.S.-traded shares slipped 3 percent this week through yesterday in New York to $12.78, the steepest drop on the Bloomberg Israel-US Equity Index after Check Point Software Technologies Ltd. and Orbotech Ltd.
Allot announced an order from India’s Tata Communications Ltd. Feb. 20, stoking speculation of further sales in emerging markets. The Israeli technology company said Feb. 11 that it received a $6 million contract to be implemented over several years with a mobile operator in the Europe, Middle East and Africa region.
The shares have tumbled 54 percent in New York through yesterday from a record high reached June 20 on concern the global slowdown will sap sales and erode demand for its products. Analysts are projecting the company’s adjusted earnings per share in the first quarter will be 9.2 percent lower than a year ago, according to the mean of 11 estimates compiled by Bloomberg.
“It’s been slow sledding here in the first quarter and we’re still looking for proof that there will be acceleration going into the second half,” Alex Henderson, an analyst at Needham in New York, said by phone yesterday.
Allot fell for a sixth day in Tel Aviv, the longest stretch of declines since Nov. 20. The shares were the second-biggest decliners on a percentage basis on the TA-100 Index, which slipped 0.4 percent at 1,107.23.
The Bloomberg Israel-US index was little changed at 90.17 yesterday. Israeli markets close early today and tomorrow.