Ilanot Batucha raised Makhteshim Agan to Strong Buy

While Investec Clali downgraded it to Reduce
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With Reuters

Ilanot Batucha said Wednesday that it raised its recommendation on agrochemicals manufacturer Makhteshim-Agan Industries to Strong Buy from Buy due to expectations of further sales gains. But meanwhile, Investec Clali downgraded the company from Neutral to Reduce due to fears the Argentine crisis will affect sales.

Investors yesterday sent MAI stock sliding on just that fear, prompting the company to protest that Argentina contributes only 2.5% of its sales. It also noted that it is cutting business with Argentina and collecting debt.

Ilanot analyst Sophie Gelper lifted MAI's 12-month target price to 11.4 shekels from 10 shekels, due to strongly rising sales and cost-cutting to increase profitability. She wrote that the company had been affected by the financial crisis in Argentina, a key market, and continuing low sales in the agricultural sector.

Investec chose to highlight MA Industries' large exposure to the Brazilian market, which makes it vulnerable to "currency contagion" due to problems with the Brazilian currency, the real. "With negative sentiment from South America and fears about world-wide economic growth, MA Industries shares are vulnerable to further correction," Investec said.

Ilanot's Gelper went another way entirely. "From a comparison of the multiples of the company in 2000 and 2001 against the average of those of other firms in the sector, our conclusion is that MA Industries share is being traded at a substantial discount," she wrote.

MAI opened the Thursday session with a decent gain of 1.2% on almost NIS 1 million turnover.