Merrill Lynch keeps Ormat in “Neutral”
“Sales rumors may support shares short term, but are too unclear to base a decision on.”
Globes’ correspondent 17 Oct 07 12:57
Merrill Lynch claims that press speculations that the Bronicki family is negotiating to sell its 27.7% stake in Ormat Industries Ltd. (TASE: ORMT) to Apax Partners contains “too much misinformation and uncertainty regarding any process of change in shareholder structure, or possible effect of it on operations, to make a clear call or investment decision.”
The investment bank reiterated its “Neutral” recommendation with a target price of NIS 60, 7% above the current market price.
Merrill Lynch notes, “Since we downgraded Ormat in September 7, Ormat went down by 6%... Although the story could bring back positive momentum in the name, at least in the short term, following sell-off of 4% last three sessions, we believe there is not enough information available and to we believe it is irresponsible to come with a trading call.”
The investment bank reiterated its concerns that Ormat is growing at a slower rate than the sector as it is running at full capacity and has bottlenecking issues. “These will eventually have to be resolved in order to capture the full benefits of one of the hottest markets in our universe.”
Merrill Lynch concludes, “We are not chasing trading opportunities here, although we believe that the potentially new ownership formation with Apax, or any other entity (following Gazit Inc.’s (TASE: GZIT) aggressive shopping spree of approximately 18% of Ormat shares) can create a trading opportunity. Changes in ownership could potentially translate into more aggressive M&A and growth profile, however it is too early to asses this.”
Published by Globes [online], Israel business news - www.globes.co.il - on October 17, 2007
