Riyad Capital reinstates STC coverage at ‘buy’; TP set at SAR 73

Riyad Capital has reinstated its coverage of Saudi Telecom Co. (STC) with a "buy" recommendation and set a target price on the stock at SAR 73, the brokerage firm said in a report.

The decision was partly based on the telco's ability to maintain market share and "sustainable revenue levels," over the last few years, the investment arm of Riyad Bank said.

Saudi Arabia's largest mobile operator is also likely to liquidate short-term investment securities to finance investment opportunities, particularly, in the Middle East.

In addition, STC's recent proposal to acquire the Kuwait's Viva Telecom is seen as a sign that the telco is looking to push ahead with a strategic plan to expand its investments, the report added.

The brokerage firm estimated STC's net profit at SAR 10.75 billion for the 2015 fiscal year (FY), marking a slight decline from the same period last year. Net profit is seen to increase to SAR 11.32 billion in FY-2016.