Mellanox Technologies Ltd. (MLNX:US) climbed the most in a week as Wunderlich Securities Inc. said Israel’s technology companies will extend gains as prospects of higher spending in the industry outweigh global slowdown concerns.
Mellanox, the maker of technology used to transfer and store data, rose 4.3 percent, the most since July 30, to 430.8 shekels at the close in Tel Aviv. The shares have more than tripled this year. Nice Systems Ltd. (NICE), the maker of telecommunications software, gained 5.6 percent, the most since September. Israel’s TA-25 Index advanced 0.5 percent.
Worldwide spending on information technology products will surpass $2 trillion for the first time this year, according to data by research firm IDC. Companies are boosting IT spending to improve performance while reducing costs, a trend that will benefit Israeli developers, according to Wunderlich. Growing concern about a global economic slowdown and a deterioration in Europe’s debt crisis erased $601 billion from global markets in the past month.
“The increase in IT spending is fueled by the simple fact that it has a return on investment, which warrants its growth,” Brian Freed, an analyst at Wunderlich, said by phone on Aug. 3 from Denver. “To an extent, a rising tide lifts all ships but some companies like Mellanox and Check Point are well positioned for outsized growth.”
Check Point Software Technologies Ltd. (CHKP:US), the world’s second- largest security networks marker, gained 2.5 percent on Aug. 3. The shares don’t trade in Tel Aviv.
The Bloomberg Israel-U.S. Equity Index (ISRA25BN) of the biggest Israeli companies traded in New York rose 1.8 percent, the most in a week, on Aug. 3. Global equity assets rallied as a report on payroll gains in the U.S. surpassed economists’ estimates. The payrolls increase of 163,000 followed a revised 64,000 gain in June, U.S. Labor Department figures showed in Washington last week. The median estimate of 89 economists surveyed by Bloomberg called for a gain of 100,000.
Global spending on technology, from purchases of personal computers to companies adopting advanced technology for high- performance computing, will increase 6.5 percent this year, IDC said in its mid-year report last week. That compares with 6.4 percent growth in the industry in 2011, data show.
Mellanox shares in Israel closed at the equivalent of $108.45. The company’s U.S. stock rose to $106.92 last week, the highest (MLNX:US) close on record. Barclays Plc increased its target price on Mellanox for the second time within a month to $140 from $105.
When the CEO began “mentioning $1 billion in revenues we think investors were skeptical,” Joseph Wolf, an analyst at Barclays Plc in Tel Aviv, wrote in an Aug. 2 report. “With 2012 expected revenues of $530 million and 2013 expected of $666 million -- which we believe could be conservative -- we see a $1 billion revenue run rate by mid-2014.”
Nice Systems climbed to 126.5, or $31.85, in Tel Aviv today. The New York shares on Aug. 3 closed at a premium of $1.59 to the Tel Aviv shares, the biggest in almost five months.
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