Alistithmar Capital slaps Mobily with ‘underweight’ rating, cuts TP to SAR 33

Alistithmar Capital slashed the 12-month target price of Etihad Etisalat Co. (Mobily) to SAR 33 and slapped the telecom operator with an ‘underweight’ rating.

The investment bank expects Mobily to see lower sales on the weak performance of voice services, its core activity. Operations and optimization of capital and operating costs will likely improve.

The fair value was based on the discounted cash flow (DCF) model, a 2 percent growth rate and a 13 percent cost of capital, Alistithmar added.

The investment bank sees Mobily recording revenues of SAR 15.4 billion and SAR 15.7 billion in 2015 and 2016, respectively. Net profit is forecasted at SAR 907 million and SAR 1.431 billion in 2015 and 2016, respectively.

An ‘underweight’ rating according to Alistithmar Capital means the stock estimated total return potential is less than zero percent. The return is expected to range negative between 10 to 20 percent over the next year.