The return on investment in Mellanox Technologies Ltd. (Nasdaq:MLNX; TASE:MLNX) for the past two years is 562%, including 104% so far in 2012. It has provided by far the best return of any technology share on either the Tel Aviv Stock Exchange (TASE) or on Wall Street. The 43% jump in its share price in after-hour trading on Nasdaq, following the publication of an outstanding financial report for the second quarter, is merely reinforcing the trend.
Judging by analysts' initial responses to Mellanox's financial report, the share will continue to rise, though probably not by the triple-digit growth of the past two years.
Harel Finance analyst Rami Rosen today reiterated his "Outperform" recommendation and raised his target price for Mellanox to $110 from $80. He said, "This was the second consecutive quarter in which Mellanox has beaten every possible growth record and raised investors' expectations to new heights."
Clal Finance analyst Jonathan Kreisler says, "Mellanox is cruising toward earnings per share of $4-4.50 on $650 million in sales in 2013." He reiterates his "Buy" recommendation for the company, but declines to offer a target price.
Barclays Capital analyst Joseph Wolf gives Mellanox a "Buy" recommendation of $105, saying that investors will want to own the share because the opportunity there continues to grow. He believe that profit taking on the jump in the share price is possible, but transient, and that the share price will continue to rise. He warns, however, that the main risk to the share this year is inflated expectations by investors.
Mellanox's share price rose 45.6% in morning trading on the TASE to NIS 369, after rising 6.7% on Nasdaq yesterday to $66.38, giving a market cap of $2.7 billion, and soaring 43.3% in after-hours trading to $95.15.
Published by Globes [online], Israel business news - www.globes-online.com - on July 19, 2012
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