Union Bank of Israel analysts have slashed the price target of

Tower Semiconductors

(Nasdaq:TSEM) from $22 to $13.1, only 17% above the share's price today.

Analysts Amir Haik and Orly Yacobi believe its value in 12 months should be $207 million, compared with $177 million today, and reiterated a Buy rating for the stock.

When Tower released its results last week, it warned that it expects sales in the second quarter to drop to $15 million, 30% less than the first quarter of 2001. It blamed the general slowdown and stock markets slump, and the semiconductors crisis.

Tower, a wafer foundry, reported a 5% drop in revenues for the first quarter of 2001 compared with the parallel quarter in 2000. Its figure was 28% below the the fourth quarter of 2000.

The company reverted to a loss of $7.1 million including expenses, 77.5% more than in the first quarter of 2000, after posting a profit in the fourth quarter of 2000 only, which came to $1.4 million.

Executive can't provide a forecast

Tower's executive is hard pressed to provide a precise forecast for the second half of 2001. But it says that the company continues to provide prototypes of semiconductors to new customers, and hopes to start serial manufacturing in the second half of this year.

Given the global crisis in the semiconductors industry, the analysts predict sales of $75 million for the year 2001. They expect that Tower will to lose money, net, for at least two quarters but decline to conjecture when it might turn to profit.

Haik and Yacobi point out Tower's advantages. One is its key shareholders, the Ofer brothers and the Israel Corporation. Another is the fact that today the company has $41.7 million in cash, and shareholders equity of $206.8 million.

One risk the company could face in the coming period has to do with its inventory, which today comes to $12.3 million. Haik and Yacobi say that if the crisis continues, its inventory is expected to increase, which could exert downward pressure on the price of Tower shares.