Elm: clarity is on its way (stays BUY)
We maintain our BUY on Elm, with an updated 12M price target (PT) of SAR 1,154, which offers 39% upside. The company’s share price has been under pressure this year, down 26% ytd on the back of the lack of clarity surrounding the Thiqah deal and reduced visibility among the quarters. Despite its weaker-than-expected 3Q25 results, Elm has reiterated its 2025E revenue growth guidance of 33-35%. Taking into account the strong seasonality of 4Q25E for both Thiqah and Elm, as well as the ramp-up of 14 new value-added services, we expect the company to deliver 32% revenue growth in 2025E, almost in line with the lower range of its guidance. We continue to view Elm as Saudi Arabia’s digital champion and a key enabler of the Saudi Vision 2030 digital initiatives. The stock is trading at a 26.0x P/E, on our 2026E estimates, representing an 18% premium vs. its global IT peers. In our view, this premium is well- justified, supported by the company’s superior growth of 26% (vs. its peers’ 3% 2024-26E CAGR, on the consensus) and its stronger margins relative to its global IT peers.
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