Bloomberg News

Mellanox Premium Swells on Record Revenue View: Israel Overnight

April 18, 2012

Mellanox Technologies Ltd. (MLNX:US) climbed in New York, widening the premium over its Tel Aviv shares by the most among U.S.-traded Israeli companies, on speculation the technology developer will report record first-quarter revenue.

Mellanox jumped 4.4 percent to an all-time high of $43.45 yesterday in New York, boosting the premium over its Israeli stock to 96 cents. The advance bolstered gains in the Bloomberg Israel-US 25 Index (ISRA25BN) of the largest Israeli companies traded in New York, which added 1.7 percent to 89.20 yesterday, the most in three weeks. The shares rose 2.8 percent to 163.9 shekels, or the equivalent of $43.56, in Tel Aviv. Internet Gold-Golden Lines Ltd.’s (IGLD:US) Israeli shares surged 8.2 percent on prospects the company’s fixed-line phone provider unit will benefit from government reform of the sector.

A maker of technology used to transfer and store data quickly, Yokneam Elit, Israel-based Mellanox will say sales in the first three months of 2012 jumped 48 percent to $81.6 million, according to the median of 10 analysts’ estimates compiled by Bloomberg. With customers (MLNX:US) including International Business Machines Corp. and Oracle Corp. (ORCL:US), Mellanox is benefiting from rising demand for data servers, according to Pacific Crest Securities Inc. and Stifel Nicolaus & Co.

“There’s room for upside” because of the growth potential for Mellanox, Kevin Cassidy, an analyst at Stifel Nicolaus who recommends buying the shares, said by phone from Washington, D.C. yesterday. “You don’t want to wait very long when you download a movie from iTunes or whatever network you have, so you need faster networks. That’s what Mellanox does.”

Internet Traffic

Global Internet traffic jumped eightfold over the past five years, and will rise fourfold by the end of 2015, according to Cisco Systems Inc. (CSCO:US)

Mellanox is the best performer on Tel Aviv’s benchmark TA- 25 Index (TA-25) over the past year. The TA-25 slipped 0.3 percent to 1,142.80 in Tel Aviv today.

The shares of the Israeli technology company were raised to outperform from sector perform at Pacific Crest yesterday, meaning Mellanox’s stock will gain more than its peers.

The Nasdaq Composite Index (CCMP) climbed 1.8 percent yesterday, its biggest advance in a month, as the International Monetary Fund raised its forecast for U.S. and global growth.

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 companies per capita than the U.S.

Big Data

Oracle Corp., the largest maker of database software, reported a 62-cent adjusted profit per share that beat the 56- cent average analyst prediction on March 20.

The Redwood City, California-based company owns a 9.6 percent stake (MLNX:US) in Mellanox and its Exadata database appliance uses Mellanox’s technology. Exadata sales doubled last quarter, Oracle said.

The area of so-called big data, where specialists mine and make sense of the constantly-expanding information available via the Internet, is expanding with more companies hiring for these positions, the Progressive Policy Institute in Washington said at the beginning of the month.

To handle the data, companies are turning to ever-faster servers, Stifel’s Cassidy said. That drives demand for Mellanox’s fast connectors.

“It doesn’t do you any good to have a high-speed server that’s on a slow network,” he said.

Internet Gold Surges

Internet Gold, the holding company that owns phone company Bezeq Israeli Telecommunication Corp., climbed to $6.18 in New York yesterday. The shares advanced to 24.49 shekels, or the equivalent of $6.51, in Tel Aviv today.

Bezeq rallied the most in 17 years in Tel Aviv yesterday speculation new government policy will allow Israel’s largest fixed-line phone company to integrate its units and cut costs. The shares rose 0.5 percent to 6.30 shekels, or the equivalent of $1.67, in Israel today.

Prolor Biotech Inc. (PBTH:US) fell 0.9 percent to 21.21 shekels, or the equivalent of $5.64, in Tel Aviv today. The shares in New York gained 4.9 percent to $5.74 yesterday.

The Nes Ziona, Israel-based drug developer tests on a drug treatment to treat obesity and type II diabetes showed positive pre-clinical results, according to a statement yesterday.

Perrigo Co. (PRGO:US), the largest U.S. maker of generic over-the- counter drugs, rose 0.5 percent to 398.1 shekels, or the equivalent of $105.78, after climbing 1.9 percent to $106.54 in New York yesterday.

“There is much to like about Perrigo,” David Steinberg, an analyst at Deutsche Bank AG, wrote in an e-mailed report on April 15. “It is the dominant player in its primary market with no significant competitor.”

To contact the reporters on this story: Tal Barak Harif in New York at tbarak@bloomberg.net; Zachary Tracer in New York at ztracer1@bloomberg.net

To contact the editor responsible for this story: Emma O’Brien at eobrien6@bloomberg.net


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Companies Mentioned

  • MLNX
    (Mellanox Technologies Ltd)
    • $43.49 USD
    • -0.40
    • -0.92%
  • IGLD
    (Internet Gold-Golden Lines Ltd)
    • $6.53 USD
    • -0.28
    • -4.29%
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