Barclays Capital has upgraded Israel's high-tech to "Positive" from "Neutral", citing stocks that are in the fastest-growing long-term high-tech sectors, such as cloud computing, storage and mobile data and handsets. "We see technology stocks as much less exposed to geopolitical risk and to potential policy shifts," it adds.
Barclays stock picks are Ceva Inc. (Nasdaq:CEVA); LSE:CVA), EZchip Semiconductor Ltd. (Nasdaq: EZCH; TASE:EZCH), and Mellanox Technologies Ltd. (Nasdaq:MLNX; TASE:MLNX) in semiconductors; Amdocs Ltd. (NYSE: DOX) in software; and Ceragon Networks Ltd. (Nasdaq: CRNT; TASE:CRNT) in hardware. "Each of these stocks is benefitting in some way from increased network traffic and storage requirements, which are being driven by growing amounts of unstructured data, mobile data in particular."
Barclays warns, "We see macroeconomic risk as the most significant source of near-term uncertainty. We also believe that the relatively rich valuations of the stocks make them vulnerable to significant downward revisions to consensus earnings expectations. We do not have specific reasons to expect estimates to be cut significantly, but the 2008 lesson is that demand can dry up fairly quickly."
Barclays gives "Overweight" recommendations for Amdocs, with a target price of $36, Ceva ($36), Ceragon ($15), Ezchip ($35), and Mellanox ($40). It also gives "Equal weight" recommendations to defense electronics maker Elbit Systems Ltd. (Nasdaq: ESLT; TASE: ESLT), with a target price of $50, and to NICE Systems Ltd. (Nasdaq: NICE; TASE: NICE), with a target price of $43.
Barclays also notes that the Tel Aviv Bluetech 50 Index has outperformed the Tel Aviv 25 Index this year, in line with global technology index performances. The Tel Aviv Bluetech 50 Index is .17% this month and 18.48% since January, compared with the 5.28% drop for the Tel Aviv 25 Index this month and 21.8% since January. In comparison, the S&P 500 information technology index has 8.2% compared with a 13.3% drop by the S&P 500 index.
Published by Globes [online], Israel business news - www.globes-online.com - on October 11, 2011
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