EZChip Soars to Five-Month High Following Gain in U.S.

EZchip Semiconductor Ltd. soared to the highest in more than five months, narrowing the widest discount to the Israeli chipmaker’s New York stock in 11 weeks.

Shares of Yokneam, Israel-based EZchip rose 4.9 percent to 108.90 shekels, or $30.40, the highest since Feb. 13, at the close in Tel Aviv. The company’s U.S. traded shares rose 1.6 percent to $30.52 on July 26, taking the weekly advance to 10 percent, the most in two months, after Juniper Networks Inc. signaled a pickup in demand for routers.

Demand for routers will improve over the next quarters as clients ramp up spending to expand networks, Juniper Chief Executive Officer Kevin Johnson told analysts last week. EZchip, which sells its processors to Juniper, Cisco Systems Inc. and ZTE Corp., will post a 5 percent increase in second-quarter sales when it reports Aug. 7, according to the median estimate of eight analysts surveyed by Bloomberg.

“With the service providers beginning to open their purses again in terms of capex investments, that has to be good for EZchip in terms of demand for their product,” Jay Srivatsa, an analyst at Chardan Capital Markets LLC in New York who raised his rating for EZchip to hold from sell on July 24, said in a telephone interview. He joins three other analysts with that recommendation, while six recommend buying the shares and one advises selling.

The stock in Tel Aviv has declined 11 percent this year compared with a 5.9 percent gain in the TA-100 Index. The gauge rose less that 0.1 percent today.

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