Falcom maintains ‘neutral’ recommendation on Jarir with TP of SAR 170

Falcom Financial Services maintained its ‘neutral’ recommendation on Jarir Marketing Co with the target price of SAR 170 per share.

The brokerage firm said in the Q3 earnings review that Jarir’s topline benefited from higher number of showrooms and increased average revenue per store.

“The trend is expected to continue given the company’s focus on store expansion in order to increase its market share. Besides, the company is expected to spend heavily on online platform to increase its penetration in that segment,” the brokerage firm said.

However, the report added that margins are likely to remain under pressure as increasing showroom count would result in lower margins due to higher promotional expenses.

In addition, the brokerage noted that a change in the product mix towards higher concentration of electronics and smartphone may also pressurize margins as these products have lower product margins compared to other product categories.

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