BofA reinstates ‘Buy’ for Saudi German Health, sets TP at SAR 81

The stock’s 26% decline year-to-date (YTD) due to market concerns around competition, offers investors a compelling opportunity, especially amid higher capacity utilization, pricing, integration and the scope for margin expansion and better returns.

BofA deems the risk/reward compelling at sub-15x 2026  P/E versus peers’ 20x.

With over 1,400 operational beds, nearly 70-80% of the licensed capacity, across seven regions and additional expansion due in Jeddah and Dammam, Saudi German’s physical footprint is largely in place, said BofA.

The company is now prioritizing ramp-up and utilization, which are forecast to grow to 75% by 2028-2029 from below 70% now, supported by its national footprint, brand equity, and premium positioning.

“We expect patient volumes and pricing tailwinds from recent accreditation upgrades, negotiations with insurance companies and a better case mix to equity to drive revenue growth at a compound annual growth rate (CAGR) of 11% during the period 2024-2027.”

As capex moderating and profitability recovering, BofA sees it falling below 2x by 2028-2029, and sees potential for optimizing receivables, supporting returns.