Itqan Cap revises Mouwasat rating to ‘Overweight’, TP at SAR 149.6/share

Itqan Capital revised its recommendation on Mouwasat Medical Services Co. (Mouwasat) to ‘Overweight’, while also increasing the target price (TP) to SAR 149.6 per share.

Exceptional change in seasonality patterns for Q3 2020, coupled with the backlog previously created by curfew measures, resulted in increased demand for Mouwasat’s services in the quarter, the research firm said in a recent report.

Meanwhile, AlKhobar hospital also continued to improve its profitability supporting Mouwasat’s net earnings.

The company delivers the sector’s highest returns and is expected to continue to outperform the sector, the report said. “Nonetheless, it has the sector’s lowest price-to-earnings (P/E) which we do not think is justified,” Itqan Cap noted.

The research firm maintains its bullish outlook for Mouwasat, backed by the continued improvement in profitability of AlKhobar hospital (20% of Mouwasat’s total capacity) and commencement of operations of expansions in Madinah and Dammam.