Scope Metal Trading and Technical Services Ltd. (TASE: SCOP) has gained 7% in morning trading on the Tel Aviv Stock Exchange (TASE) today, after IBI Investment House reiterated its "Neutral" rating for the company but upped its target price to NIS 130 from NIS 106. This reflects a 23% premium over the company's closing price yesterday.
Scope recently announced its intention to hold an offering on Nasdaq at a value of $350-400 million, a move which IBI views as highly positive. "Investors will benefit from a flotation at a value higher that the stock's current price and the capital injection will obviously help the company further expand its business," it says.
IBI believes that the offering will lower the company's net debt, which stood at NIS 540 million at the end of the first quarter of the year. It will also give the company access to financial resources that do not entail an investment of working capital. IBI adds that the offering is in line with Scope's overall strategy of increasing its overseas business to 50% of its total activity, from the current 22%.
IBI believes that the $350 million value that Scope is aiming for is "quite definitely realistic," adding that the "upside exceeds the risk."
Published by Globes [online], Israel business news - www.globes.co.il - on July 12, 2007
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