RIYADH: Morgan Stanley raised its price target by 8 percent on shares of Saudi mobile phone operator Etihad Etisalat (Mobily) and said strong growth is set to continue beyond 2010.
Last week, Saudi Arabia’s second-biggest telecom operator posted a better-than-expected 33.5 percent rise in second-quarter net profit on higher broadband revenue and more post-paid voice customers.
Morgan Stanley, which has an "overweight" rating on the stock, raised its price target to 70 riyals from 65 riyals, and said it expects revenue to grow 22 percent in 2010 and 15 percent in 2011.
Morgan Stanley expects net income at Mobily, whose largest shareholder is Abu Dhabi-listed Emirates Telecommunications, to grow 33 percent in 2010 and 11 percent in 2011.
"Mobily continues to reduce the gap between its subscriber and revenue share," Morgan Stanley said and raised its 2010 net profit estimate by 9 percent to 4 billion riyals.
Morgan Stanley said the company is well-positioned to be a winner in the fight for revenue share in Saudi Arabia, and reiterated it as its top pick in the MENA region.
