Riyad Capital maintains ‘Neutral’ on Mobily, ups TP to SAR 22

Riyad Capital maintained its “Neutral” recommendation on Etihad Etisalat Co. (Mobily), raising the stock's target price to SAR 22 from SAR 20 per share.

The telecom operator is expected to maintain profitability, and post in rise in net profit to SAR 191 million in the first nine months of 2020, compared to SAR 156 million in the same period this year. Mobily's revenue is also forecast to grow with a marginal rise in profit margins, the brokerage firm said in a recent note. 

The table below highlights Riyad Capital’s expectations of Mobily over the next three years:

"The company was able to increase its revenues in all segments despite market conditions. It also increased its operating cash flow by improving revenue and raising the level of collection, beside rationalizing its investment expenses and reducing its debt,” Riyad Capital added.

The key risks facing the company include delays of 5G network launch, which may impact Mobily’s market share, in addition to higher 5G costs.