Itqan Cap begins STC coverage with ‘Neutral’, TP at SAR 102.1

Itqan Capital initiated coverage of Saudi Telecom Co. (STC) with “Neutral” recommendation and 52 weeks target price (TP) of SAR 102.1 per share, it said in a recent report.

It added that while the traditional telecom market in Saudi Arabia is overly saturated, STC still has a promising growth potential thanks to its increased investments in information and communication technology (ICT) services provided to enterprises and digital wallet services (STC Pay).

The research firm said STC’s increased focus on ICT and fintech solutions is among its key growth catalysts, along with its expansion strategy in 5G services and the firm’s three-year dividends policy.

Meanwhile, aggressive competition, challenging economic outlook, and rising government receivables were noted as key risk factors.

Itqan Capital expects STC to achieve a net profit of SAR 11.24 billion in 2020 and SAR 11.59 billion in 2021.

It also noted that the market is already pricing in the positives and, accordingly, Itqan Capital does not see upside potential from current market price.