Itqan Capital says eXtra to maintain strong margins, raises target price to SAR 119.50

United Electronics Co. (Extra) showed healthy margins in Q1 2021, Itqan Capital said in a new report.

Despite the bleak outlook in the retail segment in the short term, the brokerage believes that eXtra shall maintain its strong margins going forward due to the contribution of the consumer financial services, United Company for Financial Services (Tas’heel), to the company’s top and bottom line.

The consumer financial services segment will continue to grow tremendously in the short- and medium-term until it reaches the beginning of its maturity by 2026.

In addition, the report pointed out that consumers will direct their spending towards travel as soon as movement restrictions are lifted, further contributing to the flattening out of the retail demand.

Itqan Capital maintained its “Neutral” recommendation on the stock, raising the target price to SAR 119.50 from SAR 106.50 per share.