Clal Finance sees 17% downside in Bezeq

Analyst Dov Rosenberg has cut his recommendation for Bezeq to "Market perform".

Clal Finance Ltd. today resumed coverage of Israel's telecommunications sector with a pessimistic review. Clal Finance cut its recommendation for Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ) to "Market perform", with a target price of NIS 3.90, 17% below today's opening price on the Tel Aviv Stock Exchange of NIS 4.73.

Clal Finance gives Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR) a "Market perform" recommendation with a target price of NIS 23, compared with today's opening price of NIS 21.01.

Clal Finance analyst Dov Rosenberg doubts that the telecommunications market will be stable in 2013, saying that the rollercoaster will continue, with reforms, agreements, and restructuring.

Rosenberg says that Bezeq is well positioned and managed, with leading subsidiaries in every market segment, but that the mobile sector will continue to hemorrhage, and that the wholesale agreement and Israel Electric Corporation's (IEC) (TASE: ELEC.B22) optic fiber venture will create tough competition in its core businesses, such as Internet lines and infrastructures. Bezeq is also leveraged with high and increasing debt, while its earnings before interest, taxes, depreciation and amortization (EBITDA) will, at best, not fall too much in the coming years.

As for Partner, Rosenberg says its situation is the mirror image of Bezeq's: worrying in the short term, but with positive points for the future after the company "went through the worst in terms of the market reforms."

Published by Globes [online], Israel business news - www.globes-online.com - on February 18, 2013

© Copyright of Globes Publisher Itonut (1983) Ltd. 2013

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