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HSBC rates Nice a Buy, and Orbotech a Hold

Orbotech revenues will see little growth till mid-2002; Nice will benefit from soaring security budgets, says analyst Manuel

By Dudi Gabay

HSBC (NYSE:HBC) has recently become a market maker for no less than ten Israeli shares listed on Nasdaq. These include Nice Systems (Nasdaq:NICE) and Orbotech (Nasdaq:ORBK). But this week HSBC analyst rated Nice a Buy, and Orbotech a Hold. Expectations for both companies should be lowered in keeping with the trends in the global economy, he wrote.

Manuel sees a double attraction in Nice, referring to its trusty management team, and the burgeoning demand for remote communications technology in the wake of the terror attacks on the United States. Nice makes digital recording systems.

The analyst set Nice a price target of $17, 33% higher than its current $12.8 price. He predicted a $2.03 loss per Nice share in 2001, reversing to earnings per share of 45 cents in 2002.

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Two Nice divisions, VIM - digital video recording, and ISS - military and governmental monitoring and control systems, stand to benefit from jumping security spending, Manuel predicted.

Its CEM division, which specializes in customer relations management systems and contributes 70% of the company's sales, may slump as enterprises slash IT spending even more.

As for Orbotech, based on assessments that the the attacks on the U.S. will prolong the slump, HSBC sees no significant improvement in Orbotech's revenues until the second half of 2002. HSBC set Orbotech's price target at $19, not far from its current price of $17.4. Orbotech is expected to lose 81 cents per share in 2001 and 60 cents per share in 2002.

Orbotech stands to profit from the global growth in sales of cellular products as companies replace legacy hardware with- information systems, Manuel wrote.

Its FPD division, which specializes testing kits for flat monitor displays, may benefit in the short term from the revival this sector has been experiencing. The company is on the other hand not expected to see any significant growth in orders of test kits for printed circuit boards.