Itqan Cap says stc's long-term prospects positive, stays 'Neutral'

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Itqan Capital maintained its "Neutral" recommendation on stc, setting the target price (TP) at SAR 121.40 a share, as positives are already priced in.

The telco reported strong growth in earnings before interest and taxes (EBIT), thanks to double-digit revenue growth coupled with cost efficiencies. However, net income growth was muted due to a high base in Q1 2020.

The telecom segment is expected to continue to benefit from stc's heavy investments in 5G and fiber-optic, primarily due to increased demand from the residential business amid COVID-19.

The company's long-term prospects are promising as non-core sectors mature and turn profitable with the return of the required capital expenditures to normal rates, the brokerage said, adding it remains positive about the telco's future growth prospect.