After the shockwaves in Israel's mobile phone market caused by intensified competition and the subsequent collapse in the share prices of Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL) and Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR), UBS analyst Roni Biran sees some upside in the share prices of the country's veteran mobile carriers.
Biran keeps the rating for both companies at "Neutral" and has revised down his target prices for Cellcom and Partner to NIS 24.50 and NIS 15.00 respectively, above yesterday's closing prices of NIS 21.36 and NIS 13.10.
In his report, "Israeli wireless: over competition resonates" Biran writes, "Golan's latest move into the business segment coupled with the recent round of aggressive price cuts and XFone 018 entry as the 6th LTE operator, have elevated investors' anxiety over mobile trends and structural issues."
"EBITDA erosion could continue as the market remains overly crowded and mobile potentially becomes secondary to broader fixed-line considerations. On the other hand, we see plenty of upside should current dynamics and market structure prove unsustainable and a possible shift to net loss improves backdrop for M&A. We expect more clarity on market direction in the second half of 2015."
Published by Globes [online], Israel business news - www.globes-online.com - on January 21, 2015
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