"Home prices driving tech workers overseas"
DS Brokerage VP research Eran Jacobi: Babylon is traded at a deep discount on its economic value.
Babylon Ltd. (TASE:BBYL) dropped a bombshell alongside the publication of its financial report for the first quarter of 2013 yesterday: longstanding CEO Alon Carmeli is leaving the company.
By early afternoon, Babylon's share price fell 3.5% on the second largest turnover so far, and "Globes" has collected the latest recommendations of analysts and capital market sources about the company.
Commenting on Carmeli's departure, DS Brokerage VP research Eran Jacobi said, "We do not consider this to be great drama in the foreseeable future, nor do we see it as a hint that the offering in the US will be cancelled."
As for Babylon's new cooperation agreement with Yahoo! Inc. (Nasdaq: YHOO), Jacobi said that it was "better than we thought". He added, "If we estimated that, in contrast to the contract with Google, which was based on a fifty-fifty sharing of revenue, the contract with Yahoo was more favorable for Babylon, with 30% for Yahoo!, we now conclude that the average distribution will be higher for Babylon during the period of the contract."
Jacobi said that Babylon's results met expectations. "Cash flow is worth mentioning. We estimate that the company will have NIS 240-250 million in cash at the end of the year, compared with its current market cap of just over NIS 1 billion. Looking forward, the future appears less threatening than at the beginning of the year. We still believe that the company will show 30% revenue growth in 2013 and that it will have a net profit and disposable cash flow of more than NIS 140 million, despite the erosion of revenue caused by the diversion of traffic from Google to others. We believe that so long as the company's chairman and CEO are around to foster future activity and development, there is no need for over-excitement about the CEO's announcement. We continue to believe that the company is traded at a deep discount on its economic value," he said.
A top capital market source told "Globes" that Babylon's financial report was interesting, and showed that the company was a money printing machine with real cash flow of tens of millions of shekels per quarter. "At the company's current market cap, we're talking about a very handsome return on the money."
Union Bank analyst Benny Dekel believes that confidence in Babylon's business model has grown and that the company's operating risk has fallen sharply. He reiterates his "Buy" recommendation for the share.
Published by Globes [online], Israel business news - www.globes-online.com - on April 29, 2013
© Copyright of Globes Publisher Itonut (1983) Ltd. 2013
You comment was recieved and soon will be published.
Load more comments
Leumi deputy CEO Daniel Tsiddon: The rise in home prices in high-tech areas in Israel is costing human capital.
Fintech co Payoneer raises $25m
Susquehanna Growth Equity led the round.
Camtek, AudioCodes set for secondary offerings
Magic Software increased the amount it raised to $58 million, after the underwriters exercised their over-allotment options.
Perion in talks to buy Airpush for $170m - report
"Techcrunch" says Perion is close to acquiring the digital ad company.
Israel is a nanotech nation
206 nanotech start-ups have been founded in the past six years
Ototo promotes public transport on demand
The app uses crowdsourcing to identify demand for passengers and sends a bus.
3D printer maker Stratasys sees growth continuing in 2014
Non-GAAP net profit rose to $82.1 million in 2013 ($1.95 per share) from $59.7 million in 2012.
Elbit Systems invests in nanomaterials co CENS
Cluster Engineered Nano Space (CENS) is in Elbit's Beersheva Incubit incubator.
Ron Lauder invests in Nielsen Innovate incubator
Ron Lauder is investing in the Caesarea incubator through R&R Venture Partners.
Parking app co Pango raises $6.5m
The company will use the proceeds to develop smart parking applications.
Compugen raises $63m, Magic $51m
The two companies held secondary offerings on Nasdaq on the basis of shelf prospectuses.
Varonis doubles on first day on Nasdaq
The company, founded in Israel, provides security solutions.
Amdocs CEO: We strive for 5% annual growth
Eli Gelman fears complacency as the company expands in emerging markets.
Intel Israel development center to remain vital
Intel Israel president Mooly Eden tells "Globes" that Israel remains central to the chip company's plans.
SuperCom share price skyrockets 920%
SuperCom CEO Arie Trabelsi tells "Globes" how he has turned around the identity solutions company.
IMI enters cyber security arena
As privatization approaches, Israel Military Industries bets on a market with enormous growth potential.
Wanted: Arts majors for high-tech
Technology companies are looking for creativity, flexibility, and the ability to think outside the box.
2013 boom year for Israeli high-tech
In the first half of the year, there was a 52% rise in demand for mobile and web developers, and salaries are up as well.
CyberArk reboots network security
CEO Udi Mokady: Media reports on electronic surveillance make explaining our product unnecessary.
Architect Eli Attia: Google stole my life's work
Eli Attia has developed an innovative building design and construction concept that Google sees generating $120 billion annually.