Credit Suisse starts Oman's Galfar with underperform

AGENCY VIEW: The brokerage also began coverage of Dubai-based contractor Drake & Scull with an "outperform" rating.(Getty Images)

Credit Suisse began coverage of Oman-based contractor Galfar Engineering with an "underperform" rating, saying it was cautious on the firm due to its high geographical concentration and low visibility for backlog growth.

The brokerage, which set a price target of 0.61 riyals on shares of Galfar, however, maintained its positive view on the Middle East and North Africa (MENA) construction sector citing the governments' commitment to infrastructure spending and better outlook for new contract awards.

MENA construction companies which are currently trading at a discount to global peers, deserve to trade at higher multiples, given the improved sentiment in the region, Credit Suisse said in a note to clients.

The brokerage also began coverage of Dubai-based contractor Drake & Scull International with an "outperform" rating and a price target of 1.19 dirhams.

It named Drake & Scull and Arabtec as its preferred stocks in the sector due the companies' diversified backlog across the Gulf Cooperation Council - and potentially North Africa - and their ability to win new contract awards.

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