Oppenheimer has started coverage of five Israeli technology stocks traded in New York. Tower Semiconductor Ltd. (Nasdaq: TSEM; TASE: TSEM), Ceva Inc. (Nasdaq:CEVA); LSE:CVA), and RRsat Global Communications Network Ltd. (Nasdaq:RRST) win "Outperform" ratings, while there are "Perform" ratings for Retalix Ltd. (Nasdaq: RTLX; TASE: RTLX) and Gilat Satellite Networks Ltd. (Nasdaq: GILT; TASE: GILT).
After receiving warm recommendations recently from Zacks Investment Research, Chardan Capital Markets, and Rodman & Renshaw, Tower Semiconductor, which trades as TowerJazz, has started to be covered by Oppenheimer with an "Outperform" rating and a price target of $1.50. This compares with a closing price in New York yesterday of $1.16, which gives the company a market cap of $314 million.
"We can see value in this leading specialty foundry through the debt restructuring and large dilution potential," Oppenheimer write. "We believe the impressive top-line growth will continue as we agree with management's expectation that Tower's goal of $1 billion in revenue is achievable by 2014. This is based on the company's plans to increase its capacity from 70,000 wafers per month (w/m) to 142,000 w/m. The additional capacity will likely be taken up as the industries TowerJazz serves continue to grow."
Oppenheimer initiates coverage of fabless semiconductor company Ceva with an "Outperform" rating and a price target of $34. Ceva's share price closed at $27.93 yesterday, giving a market cap of $643 million.
"Ceva is a quality name which leads in both market share and technology advances in the baseband DSP segment; it enters the 4G/LTE market from a strong position after successfully playing catch-up in the 2G and 3G markets, and its track record bodes well as it enters new segments: tablet computing, internet enabled televisions, connected infrastructure, and smart grid. We believe CEVA's recent growth trend is sustainable. Further, we believe 50% is achievable this year." Oppenheimer writes.
RRsat Global Communications Network also gets an "Outperform" rating, with a price target of $9. The company's share price closed at $6.82 yesterday, giving it a market cap of $118 million.
"We believe the company's refocused strategy will have it back on track for sustained earnings growth starting in 2012 as it had from 2005 to 2009, when it grew an average of 17% a year. We believe RRsat can take advantage of a growing teleport industry as well as gain market share due to its unique offering as a cost-efficient audio/video distributor with a global reach and content management capabilities. We expect the company's initiatives will result in more and larger contract wins," is Oppenheimer's assessment of the company.
Oppenheimer gives Retalix, which provides software solutions to retailers and distributors, a "Perform" rating and a price target of $15. Retalix shares closed at $14.75 in New York yesterday, giving the company a market cap of $356 million.
"Retalix has a strategy and product offering that is primed for growth," says Oppenheimer. "Moreover, with $6 a share in cash and a proven track record at beating the industry growth rate, the company looks attractive. However, with limited trading volume in RTLX stock, we feel it is safe to begin on the sidelines until R10, its newest software offering, gains some more traction." Oppenheimer says that the stock "looks fairly valued", but adds that R10 "could be a winner," and that "with something for everyone, R10 may be the most comprehensive retailing software on the market. It can be offered as a full suite or in parts, used as cloud or on every terminal, and has already has one big contract win."
Gilat Satellite Networks also starts with a "Perform" rating, with a price target of $5. Gilat shares closed at $4.65 in New York yesterday, giving the company a market cap of $189 million.
"Delays and uncertainty around the US defense budget have slowed Gilat's push into the military satellite communications market. This softness overshadows the positives that are Gilat's leading position in satellite communication equipment in developing and rural telephony markets and its continued gains here. While we think Gilat will get there in terms of expanding its products across different platforms providing solid growth, we are awaiting some clarity from defense budget delays as well as signs of traction in Raysat/Wavestream sales in nonmilitary applications before stepping in," Oppenheimer writes.
Published by Globes [online], Israel business news - www.globes-online.com - on June 22, 2011
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