Market Review: Teva Soars While Chip Stocks Plummet
The last trading week on the Tel Aviv Stock Exchange saw sharp contrasts as Teva jumped 13.47%, while chip manufacturers Tower and Nova suffered significant losses amid market volatility.
The last trading week on the Tel Aviv Stock Exchange was a period of sharp contrasts. While one veteran company celebrated a double-digit jump, two chip manufacturers suffered a collapse of almost equal intensity. These gaps paint a picture of a market reacting to two opposing trends simultaneously.
Teva jumped 13.47% to a market value of 126.6 billion shekels, overtook Elbit, and returned to being the largest Israeli company on the exchange. (Palo Alto, which is ranked above it, is an American company with a dual listing.) Two key events boosted the stock.
The first is the financial report. On the surface, it looked mediocre: Teva shifted to a net loss of 576 million dollars, and the adjusted profit dropped to only 2 cents per share, far below expectations. However, the decline was not due to a weakening in operations, but to a one-time expense of 726 million dollars for the acquisition of Emalex.
Excluding this expense, the adjusted profit would have reached about 63 cents per share, exceeding analysts' forecasts. The market immediately understood that the damage was accounting-related, not operational. Under the surface, Teva's three main original drugs, Austedo, Ajovy, and Uzedy, together crossed the 1 billion dollar threshold in a single quarter, showing a growth of 43%.
The second factor is a structural move: Teva announced it would move to a direct listing of its shares on the New York Stock Exchange, instead of the American Depositary Shares (ADS) structure. This move opens the door for the company to be included in major American indices, primarily the S&P 500. Entry into such an index means a wave of technical demand from passive funds, which pushed the stock up by about 9.6% in US trading.
On the other side of the field, chip stocks continued to bleed. Tower fell by 14.68% to a value of 76.52 billion shekels, and Nova lost 13.76% to a value of 37.4 billion shekels, a direct continuation of the negative trend on Wall Street.
The background is familiar: the American market continues to doubt the sustainability of the record investment pace in artificial intelligence. After Intel's reports, which brought back fears of excessive spending by technology giants, sentiment towards the entire sector turned for the worse. Since Tower and Nova are also traded on Nasdaq, they are dragged along by the broader market trend.
A looming drama remains: both companies are publishing their reports this week. After the collapse, expectations may have moderated, but sensitivity has increased: any small disappointment could ignite further declines, while a positive surprise could bring investors back.
At the top of the ranking, Palo Alto remained stable with a slight increase of 0.94% to a value of 829.99 billion shekels. Banks rose moderately: Poalim added 2.05% and Leumi 1.4%. Conversely, Elbit fell 3.65%, Azrieli lost 3.23%, and Phoenix 2.16%.
Teva is a staple in almost every pension fund in Israel, so its jump trickles directly into the public's long-term savings. Conversely, those heavily exposed to chips through technology indices suffered a difficult week. The reports from Tower and Nova this week will determine whether the sector's collapse will continue or moderate.
