One of the prominent shares in the latest rally on the Tel Aviv 25 Index is defense electronics company Elbit Systems Ltd. (Nasdaq: ESLT; TASE: ESLT), controlled by chairman Michael Federmann. The share's rally continued on the TASE today, with a 5.5% gain to NIS 191.10, after rising on Nasdaq over the Sukkot holiday to $53.30, a level last reached in May 2011.
The gain on Nasdaq was accompanied by heavy trading in the share. The daily turnover reached $17.7 million on Wednesday, a ten-year high.
Elbit Systems' share price has risen 18.6% in September, and by 57% over the past 12 months. Its current market cap is $2.25 billion, 31% below its all-time high reached in October 2009, when the share price was $69.
As often happens in the capital market, Elbit Systems' rally was unforeseen by most analysts. After the company published its financial report for the second quarter of 2013 in August, Migdal Capital Markets and Clal Finance gave it a "Hold" recommendation with a target price of $47. "We give a 'Market perform' recommendation because we see no catalyst that will generate a substantial change in the short term," said Clal Finance analyst Dov Rosenberg on August 13.
Psagot Investment House Ltd. was the only party to give Elbit Systems a "Buy" recommendation. But the target price of $51 has turned out to be conservative. Psagot analyst Ilanit Sherf told "Globes" today, "The company's financial reports in the latest quarters were good. Elbit Systems showed a slight growth in sales, despite the problematic conditions in some of its markets. On the other hand, it is cutting expenses. The adjustments being made by management to the economic environment are a very good reason to give it a premium."
Sherf added, "It can be assumed that the company is exposed to foreign investors seeking to buy TASE shares, which is boosting the turnover in the share."
Elbit Systems CFO Joseph Gaspar recently toured the US to meet with investors. The company says, however, "This was not an unusual event organized by Elbit System, but routine meetings that the company holds from time to time with foreign investors."
Published by Globes [online], Israel business news - www.globes-online.com - on September 29, 2013
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