Goldman widens Gilat 2001 loss estimate

Lehman starts Elbit Systems as Buy
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and bad news for Israeli companies on Tuesday: Goldman Sachs widened its 2001 loss-per-share forecast for Israeli satellite firm Gilat Satellite (Nasdaq:GILTF) while Lehman Brothers started coverage of Elbit Systems (Nasdaq:ESLT) with a Buy rating.

Goldman Sachs widened Gilat's loss forecast for 2002 hugely, from $3.29 to $14.98. The bank cast doubt on the firm's view that one-off charges in the third quarter would not be repeated, and that cost cuts would produce positive cash flow in 2002.

"We believe that visibility is limited into 2002," the bank said in a research note.

Gilat's cashflow could also suffer from operational issues, the bank said, adding that this was a major concern given its cash of $85 million and debt of $518 million, of which $30 million was short-term.

Gilat's shares closed up 18.4% at $2.51 on Monday.

Meanwhile, Lehman Brothers initiated coverage of Israeli defense contractor Elbit Systems with a 2-Buy rating and an 18-month price target of $24.40 a share.

"Following the major merger with El-Op in 2000, Elbit Systems is well positioned to lead the inevitable consolidation of the Israeli defence electronics industry," analyst Tobias Fischbein said in a research note dated November 12 and released to the media on Tuesday.

"We believe the company is poised for high single-digit sales growth and even higher earnings growth, both organically and through acquisitions."

Elbit's Nasdaq share closed at $17.77 on Monday.