Al Rajhi Cap says Leejam's Q1 2021 beats estimates, revises rating to ‘Neutral’

Leejam Sports Co. headquarters

Leejam Sports Co.'s (Fitness Time) Q1 2021 loss of SAR 7 million came below Al Rajhi Capital's estimates of SAR 11 million.

The increase in COVID-19 infections may lead to the decline in the number of new subscribers, which will likely impact the stock's earnings per share (EPS) in 2021, the research firm said in a recent report.

Al Rajhi Capital stated that it is still optimistic on the long-term story of Leejam, due to the launch of the low-cost Xpress fitness centers, which would help improve returns.

However, the brokerage lowered Leejam’s rating to “Neutral”, reducing the target price to SAR 76 a share.

According to the report, the downgrade risks are potential lockdown due to the increase in COVID-19 cases, which would impact the company's revenues, in addition to the fierce competition for the fitness applications and other clubs in the region.