Yahoo Deal Boosts Babylon Shares to 2-Month High: Tel Aviv MoverShoshanna Solomon
Babylon Ltd. advanced to the highest level in more than two months on bets the Israeli software maker’s new Internet advertising revenue-sharing agreement with Yahoo! Inc. will boost sales.
Shares of the company, which has a similar relationship with Google Inc., jumped 5.8 percent to 22.4 shekels, the highest since Feb. 17, at the close in Tel Aviv. Volume on the stock was 27 percent above the three-month daily average. Or-Yehuda, Israel-based Babylon’s shares were the biggest gainers in percentage terms on the TA-100 Index, which added 0.6 percent.
The translation software maker, rose for a fifth day after saying today that it signed a four-year accord with Yahoo to share revenue from online advertising, including mobile Internet. The company expects the agreement to make a “significant contribution” to business, according to a filing today with the Tel-Aviv Stock Exchange.
“The four-year accord significantly lowers the risk for the company,” Beni Dekel, an analyst at Union Bank of Israel Ltd., said by phone today. Dekel upgraded the company to “buy” on April 18. “For the first time the company will get a percentage of revenues from advertising as opposed to just a fixed amount per user and the accord opens up a new mobile market.”
Babylon’s stock, which more than doubled last year, fell 25 percent in the two-month period ending March 31 on concern that a change in the company’s relationship with Google will hurt revenue. Google contributed 83 percent to Babylon’s 2012 sales, a company filing showed in February.
“I wouldn’t be surprised if by the end of the year Yahoo will be Babylon’s main customer,” Dekel said.