Citi Research have revised their target price for Safaricom stock from KSh28.8 per share to KSh30.1 per share. The decision is based on the positive outlook they have on M-Pesa growth.
In the past two years, M-Pesa teamed up with global money transfer services such as Pay Pal, AliExpress, and WeChat with the aim of cashing in on diaspora remittances. The international partnerships have paid off with M-Pesa handling a third of all diaspora remittances into Kenya in the last financial year.
The percentage of remittances sent through the Safaricom platform increased from only 15 percent of remittances in 2017 to 34 percent in 2019.
The popular money transfer platform is expanding its reach in Africa. Increasing trade within the East African region is expected to contribute to M-Pesa’s growth.
Despite the expected growth in M-Pesa, Citi Research are concerned about governance matters at the top telecommunications company in Kenya. Safaricom is yet to name a successor for its late CEO, Bob Collymore.
As a result, analysts at Citi are neutral on the Safaricom stock.