Israeli stocks traded in New York had the biggest weekly decline this year on concern slower growth in China and the U.S. will erode earnings for technology companies Nice Systems Ltd. (NICE:US) and Allot Communications Ltd. (ALLT:US)
Nice, a maker of analytical telecommunications software, slid 2.3 percent to $38.30 in New York last week, widening the discount (NICE:US) to its Tel Aviv shares to the most among dually traded shares. Allot rose 1.6 percent to 89.49 shekels today, or the equivalent of $23.88, after dropping 2.4 percent for the week in New York to $23.73, and further narrowing its premium to 15 cents. The Bloomberg Israel-US Equity Index (ISRA25BN) had the largest weekly decline since Nov. 25, dropping 2.3 percent last week to 87.53. Nice shares fell 3.1 percent at the 4:30 p.m. close in Tel Aviv today.
The highest valuations in at least eight months are spurring investors to sell Israeli technology stocks after China posted the smallest economic growth in almost three years and U.S. consumer confidence weakened, according to Chardan Capital Markets LLC. Allot sold (ALLT:US) about 35 percent of its products in Asia and the U.S. in 2010, while 63 percent of Nice’s revenue is derived from companies in the Americas.
“Any kind of data that suggests a slowdown globally, especially in China, where so much of the tech products are getting sold into or manufactured from, brings a lot of nervousness,” Jay Srivatsa, the managing director of equity research at Chardan, said by phone last week. “We still don’t know if the recovery in the U.S. market is for real or not.”
Hod Hasharon, Israel-based Allot’s U.S. stock is valued at 64 times reported earnings (ALLT:US), about four times the 17.7 ratio for shares on the Nasdaq Composite Index. (CCMP) The company’s valuation has fallen from a multiple of 66 on April 9, the highest level since Aug 1.
Nice’s Tel Aviv shares declined to 141.70 shekels today, the equivalent of $37.81, or 42 times reported profit.
EZchip Semiconductor Ltd. (EZCH:US), the Yokneam, Israel-based manufacturer of network processors, rose 1.2 percent today to 164 shekels, or the equivalent of $43.76. The shares in New York fell 0.6 percent last week to $43.41, paring its valuation to 68 times earnings.
U.S. stocks posted their largest weekly loss this year. The Standard & Poor’s 500 Index (SPX) slid 2 percent in the week and the Nasdaq Composite lost 2.2 percent. Israel’s benchmark TA-25 index (TA-25) slid 0.9 percent to 1,121.29 after a 1.2 percent decline last week in trading shortened by the Passover holiday. The gauge dropped 1.8 percent today to 1,110.48.
Allot, which Chardan rates a buy, derived 13 percent of its sales from U.S. customers in 2010 and 22 percent from Asia and Oceania.
The company will get “multi-million dollar revenues” from U.S. carriers in 2012, Rami Hadar, Allot’s chief executive officer, said on a Feb. 7 conference call with analysts.
ClickSoftware Falls Short
EZchip got 40 percent of its 2011 revenue (EZCH:US) from China and Hong Kong and 19 percent from North America.
ClickSoftware Technologies Ltd. (CKSW:US) slid 17 percent last week to $10.46, the worst performance since October 2009. The Petach Tikva, Israel-based maker of order-tracking software said first quarter revenue will be about $21.6 million, falling short of the $22.5 million median of four analysts’ estimates compiled by Bloomberg before the company’s announcement.
Mellanox Technologies Ltd. (MLNX:US) rose 0.7 percent in Tel Aviv today to 153.30 shekels, or the equivalent of $40.91. The 59- cent premium (MLNX:US) afforded the stock last week in New York was the largest among the biggest dual-listed Israeli companies.
Mellanox, which developed a technology used to transfer and store data, will probably say on April 18 that first-quarter adjusted net income rose 39 percent to 33 cents a share, according to the median estimate (MLNX:US) of eight analysts surveyed by Bloomberg.
While analysts expect Redmond, Washington-based Microsoft to report that fiscal third-quarter sales rose at a slower pace than the previous year and that Santa Clara, California-based Intel will say revenue fell in the first quarter, the companies may indicate positive outlooks, providing a boost for technology stocks, Chardan’s Srivatsa said.
“We’re going to need to wait to see how Intel and Microsoft and those guys come out,” he said. “My sense is that the first quarter for the most part appears to be bottom for a lot of the tech names.”
Microsoft’s sales gained 4.4 percent in the first three months of the year, according to 26 analysts surveyed by Bloomberg, compared with 13 percent growth last year. Intel will probably say that revenue fell 0.2 percent to $12.8 billion, according to the median of 40 analysts’ estimates compiled by Bloomberg.
Israel, 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 country outside the U.S. after China. The nation is also home to more startup firms per capita than the U.S.
LivePerson Inc. (LPSN:US), a maker of software that can track and communicate with consumers surfing websites, will boost revenue growth as companies seek out more data on their customers, Chief Executive Officer Robert Locascio said in an interview at LivePerson’s New York headquarters on April 11.
Shares of the company, which has about 50 percent of its staff in Ra’anana, Israel, advanced 0.5 percent to 58.74 shekels today, or the equivalent of $15.67, after New York shares fell 5.8 percent to $15.54 last week.
SodaStream International Ltd. (SODA:US), an Airport City, Israel- based manufacturer of machines for making soda at home, gained 3 percent to $35.62 on April 13, boosting its weekly gain to 6.9 percent.
“SodaStream’s technology, product portfolio, customer relationships, and execution capabilities have helped position it as the global leader in home beverage carbonation,” Jon Andersen, an analyst at William Blair & Co., wrote in an e- mailed note on April 13 titled “10 reasons we continue to like the SodaStream story.” Anderson maintained an outperform rating on the stock, indicating he expects it to rise more than the overall market.
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