Israeli company Retalix (Nasdaq: RTLX), which is also traded on the Tel Aviv Stock Exchange, continues to consolidate its position on the global market at the expense of its weakening rivals, Bank Hapoalim analysts said today.
The company published its second quarter financials two weeks ago. Net profit was $846,000, and revenue was up 87% to $14.5 million. The chief reason for the increase in revenue was an increase in revenue in the US market. The company’s sales in North America account for 60% of its revenue.
Bank Hapoalim’s analysts believe that the company’s revenue will grow by 60% this year. The analysts note that the company announced that it has signed agreements with two large retail chains in Europe and was increasing the number of its employees in the US.
The analysts also cite the weakness of Retalix’s chief rivals, including Radiant and JDA Software. The analysts believe Retalix may buy some of its competitors, in view of weakness in the market, and the low price of these competitors’ shares.
According to the analysts, Retalix subsidiary StoreAlliance is expected to generate revenue of $1.5 million in the second half of the year, and break even operationally towards the end of next year.
The analysts believe that Retalix will sell some of its stake in StoreAlliance to a strategic partner, at a company value of $20-25 million. Retalix’s stake in StoreAlliance may go down to 50% following such a move. Coca Cola invested in StoreAlliance as a strategic partner last year.
Bank Hapoalim’s analysts retained their “High Risk Buy” recommendation for Retalix, and increased their target price to $20, reflecting a valuation of $249.6 million for the company.
Retalix provides management systems for retail chains, catering, and convenience stores. Its major shareholders are co-founders Brian Cooper and Barry Shaked.
Published by Israel's Business Arena on 20 August, 2001