A little meat to go with those spuds:
RESEARCH ALERT-Formula <FORM.O> initiated 'buy'
JERUSALEM, March 25 (Reuters) - BancAmerica Robertson
Stephens initiated coverage of Formula Systems Ltd <FORT.TA>
<FORM.TA> <FORTY.O>, an Israeli software holding company, with a
"buy" recommendation.
"Formula commits substantial resources to its private
holdings," analyst Victor Halpert said in a report.
"In the short term, this strategy may negatively affect the
company's earnings performance; however, historically these
investments have proved to be highly additive to the company's
bottom line and have generated substantial capital gains," he
said.
Halpert said the company is trading at 8.7 times 1998
estimated earnings and 8.0 times 1999 estimated EPS. The average
price-earnings ratio for similar software companies is 26 for
1998 and 20 for 1999, "a huge premium over Formula's valuation,"
he said.
Halpert set a 12-month price target of $55-65. Formula's
shares on Nasdaq were trading at $39-1/8 in mid-morning trading
on Wednesday.
The analyst said that Formula is poised to nearly double
exports to $100 million in 1998.
In addition, particular strengths in niche markets within
the information technology sector and the ability to develop
acquisitions, some of which will go public this year, point to
continued future growth.
"Formula was...successful in acquiring its subsidiaries at a
fraction of their real cost and in the process expanding their
operations and products," he said.
BancAmerica Robertson Stephens said Formula would post a 65
percent increase in 1998 earnings compared with 1997 earnings of
$2.56.
((Jerusalem newsroom, +972 2537-0502,
jerusalem.newsroom@reuters.com))
REUTERS
Copyright REUTER 16:45 03-25-98 |
