The 2014 Emerging EMEA Research Team: Information Technology & Media, No. 2: Haim Israel & team

Haim Israel & team
Bank of America Merrill Lynch

First-place appearances: 0

Total appearances: 2

Team debut: 2011

Despite a change in leadership, the four-strong Bank of America Merrill Lynch crew holds on to second place. Haim Israel, who joins with Stephen Pettyfer in directing the No. 2 troupe in Telecommunications, makes his debut as leader of this team. The analysts are posted in Dubai, Moscow and Tel Aviv, and they are generally upbeat on media names, “despite an economic slowdown,” says Israel. “The Russian advertising market looks well positioned to deliver a 6 percent [compound annual growth rate] in 2013 through 2020 in rubles, versus 20 percent over the past ten years. With higher disposable incomes and an evolving middle class, which we expect to almost triple by 2020, every consumer is becoming more valuable to advertisers, which will lead to higher media prices.” Consequently, media companies “are in a sweet spot in the medium to long term, as they benefit from the trend,” he adds. “We do prefer ‘new media’ over TV due to their much better structural outlook.” An example is Mail.ru Group, a Russian Internet services provider that the BofA Merrill squad added to its coverage universe last June with a buy rating and price objective of $38 for the global depositary receipts. Through May the GDRs jumped 17 percent, to $34.04, and the analysts project a rise to $45. Investor interest in Russian media names will rebound as sentiment toward that country improves, they forecast. “Intact structural drivers, strong earnings-per-share growth and a chance for upside earnings surprise from better monetization will be key attractions,” Israel sums up. “Increasing government regulation of the sector and slowing Internet user growth will be key issues.”

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