In a report on Israel's wireless telecom sector entitled "A Tragedy in Four Acts," Citi has cut its recommendation for Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL) from "Hold" to "Sell," while raising its recommendation for Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR) from "Sell" to "Hold."
However, both companies have had their target price cut. Citi has slashed Cellcom's target price by 23.3% from NIS 112 per share to NIS 73, and lowered Partner's target price from NIS 65 to NIS 50 per share.
Citi analyst Michael Klahr recounts that Act 1 saw the rise of Israel's cellular companies before 2010. Act II deals with the more pro-consumer stand taken by the regulator in the first half of 2011. Act III deals with the tough operating environment expected through 2014, when Citi sees intense competition, including from MVNOs. In Act IV after 2014, Klahr sees "Blue skies after the storm."
Cellcom's share price closed at $28 on the NYSE yesterday, giving a market cap of $2.77 billion. The share price was down 1.21% in late afternoon trading on the TASE today to NIS 94.
Partner's share price closed at $15.38 on Nasdaq yesterday, giving a market cap of $2.39 billion. In late afternoon trading on the TASE today, the share was up 2.18% to NIS 53.51.
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