Riyadh - Mubasher: Al Rajhi Capital Research has revised its target price (TP) for Savola Group to SAR 40.8 per share, up from SAR 39.4, and maintained their “Neutral” rating, according to a recent report.

“Our target price implies 8.9% downside from the current market price. However, should investors choose to use the current market price of Almarai at SAR 80 per share, instead of target price, then Savola’s TP value increases to SAR 49.1 per share,” the report explained.

“We continue to believe that the turnaround in retail segment’s revenue performance, which has been under pressure in the previous few quarters, is key to Savola’s re-rating,” it added.

The research firm believes the revenue weakness is likely due to higher than estimated sales decline in the retail segment, partly accentuated by weak consumer spending that has impacted most consumer companies in the second quarter of 2017.

The report noted that estimates undergo only a marginal revision, pending release of detailed financials, to incorporate Q2 headline numbers.