Housing Rebound Drives Caesarstone Jump: Israel Overnight

The strongest U.S. housing market since 2008 is bolstering Caesarstone Sdot Yam Ltd.’s earnings as the maker of quartz countertops leads this year’s gains among Israeli companies in New York.

Shares of Caesarstone jumped 6.1 percent to $29.23 last week, extending this year’s rally to 83 percent. The Bloomberg Israel-US Equity Index posted a third weekly advance, led by Cellcom Israel Ltd. EZchip Semiconductor Ltd. closed at the widest premium for dual-listed companies. ClickSoftware Technologies Ltd., the software maker that counts George Soros’s Soros Fund Management as its second-biggest investor, tumbled 15 percent as profit and sales trailed projections.

The housing revival in the U.S., Caesarstone’s fastest-growing market and the second-biggest source of sales after Australia, is bolstering the outlook for profit after net income doubled last year, according to Barclays Plc’s Stephen Kim, the most accurate analyst on the stock. After sales of new U.S. homes climbed more than forecast in May to the highest level since July 2008, the Israeli company will report the highest revenue in at least six years, according to the average of four analysts’ estimates compiled by Bloomberg.

“We’ve got some very nice earnings growth at the company,” Kim, who rates Caesarstone the equivalent of buy, said by phone from New York. “This has been a product story and behind that, it also has the benefit of U.S. residential improving. This is a name that we are favorably disposed to.”

Kim is ranked first among seven analysts who cover Caesarstone after his recommendations delivered the best relative returns based on the performance of all securities covered over the past year.

Caesarstone’s Valuation

The Bloomberg Israel-US advanced 2.2 percent to 93.82 last week. Israel’s benchmark TA-25 Index gained 0.3 percent to 1,218.35 at 9:57 a.m. in Tel Aviv.

Caesarstone capped the biggest weekly jump since May 17 to trade at 23 times reported earnings, according to data compiled by Bloomberg. That exceeds the price-earnings-ratio of 17 for the measure of the biggest Israeli companies in New York, while trailing the average valuation of 31 for its global peers.

Cellcom, Israel’s largest mobile phone provider, jumped 7.9 percent to $9.76 for the biggest weekly rally in two months. Its Tel Aviv stock this morning climbed 0.6 percent to 35.2 shekels, or $9.78.

EZchip, based in Yokneam, Israel, rallied 3 percent for the week to $28, trading at a 3.2 percent premium over its Tel Aviv shares. The shares in Israel this morning narrowed the gap, advancing 2.7 percent to 100.3 shekels, or $27.85.

ClickSoftware posted the biggest weekly retreat since April 2012, closing at $7.19. The Petach Tikva, Israel-based company said July 8 that its second-quarter loss was as much as 8 cents a share on revenue of about $24.5 million, below analysts’ estimates, as more customers buy software that runs over the Internet instead of being installed in users’ computers.

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