Magic Software (NASDAQ-MGIC) Buy Recommendation

Magic Software Enterprises Ltd. (NASDAQ–MGIC)
Valuation-$4.15
Price August 15, 2008-$2.00

Our valuation for MGIC is $4.15 per share. It also $.95 per share in cash, 58% gross margins and is making money.

Q2 results (June 30, 2008) showed a 12% increase in sales to $16,030,000 and $.05 per share in EPS versus $.03 last year (most of which was from discontinued operations). MGIC seems to have broken into the growth mode after several years of treading water and losing money. For the 6 months ended June 30, revenues were $31.1 million up 11% over the prior year and EPS was $.05.

Formula Systems owns about 17 million MGIC shares or 54% of the company. Formula trades on NASDAQ under the symbol FORTY. Formula is an Israeli investment company that buys and sells investments. We think that MGIC will continue to improve its performance and ultimately will be sold as Formula liquefies its investment.

MGIC is based in Israel.

The 52 week low has been $1.12 and the high $2.27.

MGIC trades about 70,000 shares a day.

There are about 32 million fully diluted shares outstanding.
About Magic Software
Magic Software Enterprises Ltd. is a leading provider of multiple-mode application platform solutions – including Full Client, Rich Internet Applications (RIA) or Software-as-a-Service (SaaS) modes – and business and process integration solutions. Magic Software has offices in 10 countries and a presence in over 50, as well as a global network of ISV’s, system integrators, value-added distributors and resellers, and consulting and OEM partners. The company’s award-winning code-free solutions give partners and customers the power to leverage existing IT resources, enhance business agility and focus on core business priorities. Magic Software’s technological approach, product roadmap and corporate strategy are recognized by leading industry analysts. Magic Software has partnerships with global IT leaders including SAP AG, salesforce.com, IBM and Oracle. For more information about Magic Software Enterprises and its products and services, visit

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