Falcom maintains ‘neutral’ recommendation on Almarai with TP of SAR 49/share

Falcom Financial Services maintained its ‘neutral’ recommendation on Almarai Co. with the target price (TP) at SAR 49 per share.

“Almarai continues to lead the market in most of the categories it operates in and is likely maintain stable market share,” the brokerage firm said in a research report.

Falcom expected that pressure on gross profit and the rise in COVID-19 related costs to be partially offset by the positive change in the product and channel mix, adding that the poultry segment is likely to contribute significantly to profit growth.

In addition, the company has a strong balance sheet, with a declining leverage ratio, and capex is also expected to reduce, and its free cash flow will continue to improve on higher EBITDA and lower capex.

Almarai is expected to post SAR 1.909 billion in net profit in 2020, 5% higher when compared to 2019.

Falcom’s neutral rating means that the target share price is either more or less than the current share price by 10%.