EZchip Discount Narrows on Earnings Forecasts: Israel Overnight

EZchip Semiconductor Ltd. (EZCH) rose in New York, narrowing the Israeli chipmaker’s discount to Tel Aviv-traded shares, on speculation that earnings growth will pick up in the second half of the year.

The stock gained 0.3 percent to $27.72 in New York, leaving it 1.6 percent below the price in Tel Aviv, where markets were closed yesterday for a holiday. Given (GIVN:US) Imaging Ltd., the Israeli maker of swallowable cameras, closed at a 4.4 percent premium in New York. The Bloomberg Israel-US Equity Index retreated from the highest close in almost two years, slipping 0.3 percent.

EZchip’s adjusted profit (EZCH:US) will more than double in the third quarter and rise 30 percent in the last three months of the year as customers ramp up orders for equipment that speeds up data transfers, according to the average estimate of analysts surveyed by Bloomberg.Cisco Systems Inc. (CSCO:US), the biggest maker of networking equipment, reported profit that topped estimates in its most recent quarter as businesses spent more to meet surging demand for online data delivery.

“Their customers finally have some new products shipping, and just the way the dynamics are, I think the second half is setting up to be very good,” Andrew Uerkwitz, an analyst at Oppenheimer Holdings Inc. (OPY:US) in New York, who rates EZchip the equivalent of buy, said in a telephone interview yesterday.

The Bloomberg Israel-US gauge snapped a five-day rally, dropping to 94.42. Israel’s benchmark TA-25 Index (TA-25) fell less than 0.1 percent to 1,220.10 at 10:56 a.m. in Tel Aviv. Israeli markets were closed yesterday for the Tisha B’av fast day.

EZchip, based in Yokneam, Israel, this morning declined 0.9 percent to 99.45 shekels, or $27.81, in volume of 2.7 percent of the three-month daily average. The company said yesterday that it will report second-quarter earnings on Aug. 7.

Given rallied for a second day after the company announced that its PillCam Colon was approved in Japan earlier than estimated. The stock rose 0.2 percent to $15.51 in New York yesterday, the highest price since May 21. The Yokneam, Israel-based company added 3.1 percent in Tel Aviv this morning to 54.55 shekels, or $15.26.
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