The report season for the Israeli companies traded on Wall Street will open towards the end of this month and will reach its peak in mid-November. In contrast to the corresponding period in 2021, when a large part of these companies traded around record levels, today the situation in the market is different: most shares have lost significant percentages of their value and the general trend in the market is volatile and mostly negative. This is against the backdrop of the macroeconomic environment, which in recent months includes inflation, attempts to curb it through interest rate increases, fears of a recession and the continuation of the war in Ukraine. At the same time, exchange rate fluctuations can also affect the companies’ results in the upcoming reports.
Usually after the end of a quarter, profit warnings come from companies that discover that they did not meet the forecast they published for the quarter. As of writing these lines, no warnings have been issued by companies from Israel. Some of the companies have already reported a date for publishing their reports for the third quarter of the year, a fact that signifies that they will not publish warnings – among others, these are Check Point, Cyberark, Redware and Silicon, and Productivity Network Schaaf published positive preliminary results.
Which reports should you pay attention to in the upcoming report season?
You will continue to grow, and you will see a profit of almost 10 per month
The internet company Wix It will publish its financial statements towards the middle of November. According to the company’s forecast, it expects revenues of 341-345 million dollars in the quarter, a growth of 7%-8% compared to the corresponding quarter. Analysts expect another quarter of net loss in the company, but reduced compared to the corresponding quarter.
Wix recently reported on an annual cost reduction plan of 150 million dollars, which also included laying off about 100 employees, most of them not in Israel. The company expects to see an improvement in gross profitability as a result of the reduction already this year.
We recently learned about the entry of the activist investment fund Starboard to invest in Wix, a step that may signal the beginning of an activist struggle in the company, and this after a drop of over 80% in the share price since the peak of early 2021. Meanwhile, since the report of the holding (9% of Wix shares) no More reports have been published. Judging by Starboard’s past moves at other companies, it may require changes to the board’s composition or suggest measures to flood the board. Wix itself did not respond to Starboard’s report, and its management may be asked about the issue and add information when the reports are published.
Wix issue in Nasdaq trading / Photo: Nasdaq OMX
The shipping company Zim usually publishes its reports towards the end of the reporting season. stock Zim, which enjoyed particularly positive momentum against the background of the tide in the maritime transport industry that boosted its transport rates and profits, changed direction in recent months and lost dozens of percent from the peak it reached about seven months ago. In the months that have passed since then, there has been a decrease in sea freight prices, although they remain historically high. The decrease came against the background of the exit from the Corona crisis, and at the same time also the cooling of demand in the world due to the interest rate increases and the slowing down of the growth rate.
In the second quarter of this year, Zim posted a net profit of $1.3 billion – a 50% increase compared to the corresponding quarter in 2021 but a 24% decrease compared to the first quarter of 2022. For the first time, Zim also missed the analysts’ forecast and did not overtake it.
In the third quarter, analysts expect Zim to record revenues of $3.23 billion and net profit of $9.77 per share. The management of the company will update as usual regarding the state of the market in which it operates with the publication of the reports.
Iron Source and Tower will issue reports pending the merger
Iron Sources which developed a platform for application developers, and Tower, which manufactures chips, are two Israeli companies that are waiting to complete the transactions for their acquisition. Iron Sources is acquired in a stock transaction by Unity for approximately $3.6 billion, and Tower is purchased in a cash transaction by Intel at a value of $5.4 billion. According to the original reports, the Tower deal should close by February 2023 (12 months after the deal was reported), and the Iron Source deal should close by the fourth quarter of 2022.
Since the sale was reported Tower Intel has stopped Tower post predictions. Analysts covering the company expect revenues of approximately $427 million and a net profit of 60 cents per share in the third quarter, with both parameters showing growth compared to the corresponding quarter.
Iron Source also stopped updating forecasts for the same reason, when the last annual forecast it published (and confirmed when the sale was reported) was for revenues of $750-780 million and EBITDA of $230-240 million. The analysts forecast for the third quarter is for revenues of approximately 188 million dollars and a net profit of 5 cents per share.
While there have been no unexpected events so far on the way to completing the Tower deal, in the Iron Source-Unity deal the companies have already encountered several obstacles, including an attempted takeover of Unity by another company. However, the companies repeatedly reiterated their confidence in completing the transaction.