Saudi Aramco of Saudi Arabia has been given an “overweight” rating by JPMorgan, marking its first major assessment from a brokerage.
This rating follows Goldman Sachs’ “neutral” rating earlier in the week, with a price target of 41 Riyals per share. In contrast, JPMorgan’s overweight rating comes with a target of 37 Riyals per share. JPMorgan highlights Saudi Aramco’s ability to sell oil at a premium, maintain flexibility in capital expenditure, and keep a low debt to equity ratio. This enables the company to distribute a higher percentage of its cash flow and potentially increase production with minimal additional expenses.
JPMorgan also suggests that Saudi Aramco could enhance its capacity from 12 million barrels per day to 15 million barrels per day, with current production at 10 million barrels per day.
JPMorgan was among the nine firms involved in organizing Saudi Aramco’s landmark IPO, which raised a record-breaking $25.6 billion at 32 Riyals per share. The company further garnered $3.8 billion by selling more shares to enthusiastic investors, totaling the IPO proceeds to $29.4 billion.
The success of Saudi Aramco’s IPO is seen as a significant achievement for Saudi Arabia. The government aims to utilize the funds raised to diversify the economy and reduce reliance on oil. As of Monday, Saudi Aramco’s market capitalization stands at $1.86 trillion, nearing the $2 trillion goal set by Crown Prince Mohammad Bin Salman.
