In view of the positive momentum in the business of semiconductor company Tower Semiconductor Ltd. (Nasdaq: TSEM; TASE: TSEM) (which trades as TowerJazz), alongside improvement in profitability and a low share price, Bank Hapoalim (TASE: POLI) recommends the stock, setting a $21 target price, 68% above the current price on the stock exchange.
Bank Hapoalim has started to cover Tower Semiconductor with an "Outperform" rating. According to analyst Shay Zigelman, "All Tower's areas of activity are growing, especially its radio switches business."
Tower is traded on Nasdaq and the Tel Aviv Stock exchange at a market cap of $966 million. Its share price rose 6% during trading in in Tel Aviv today, thanks to the recommendation and also thanks to an announcement by the company that it had signed a definitive agreement with one of its customers to receive $30 million advance payment to be used for capacity expansion in its worldwide fabs. "TowerJazz will provide secured capacity to support current and forecasted customer manufacturing needs," the announcement said.
Tower Semiconductor CEO Russell Ellwanger said, "We are seeing through customers' forecasts, purchase orders, and our sales and marketing channels a very high demand, exceeding our current manufacturing capabilities, primarily in our analog 0.18um technology processes.
"Hence, we are implementing a four-pronged, proactive strategy as follows: (i) we are rapidly cross qualifying our Israeli, US and Japanese fabs for manufacture of products and technology platforms originating in our US and Israeli fabs, (ii) we are investing in capacity to enable quick ramp up of more products, (iii) we are continuously exploring M&A opportunities and (iv) we are engaging in customer funded programs for customers who need capacity reservation and/or new capabilities and capacity. This signed definitive agreement is an example of the latter. We continue to execute on all fronts in parallel."
The possibility of M&A activity arises in Bank Hapoalim's review as well. "We estimate that the company will look to acquiring activity in the US market, with the growing sensors field looking attractive," Zigelman writes.
Published by Globes [online], Israel business news - www.globes-online.com - on September 7, 2015
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