Sprint shares up after Nomura upgrade to 'Buy'
NEW YORK (AP) — Shares of Sprint Nextel Corp., the country's third-largest cellphone company, climbed Monday after an analyst upgraded them.
THE SPARK: Analyst Mike McCormack of Nomura Securities upgraded Sprint from "Neutral" to "Buy" in a Monday morning note, saying it the company's promise that an ongoing network revamp will save it money looks more credible.
McCormack raised his target price on the shares from $2.50 to $7.
THE ANALYSIS: McCormack noted that Sprint, which has been a consistent money-loser for years, is too small to operate with the same profit margins as Verizon Wireless and AT&T. But it's "taking the proper actions to improve margins and compete effectively," he wrote. In addition, new pricing plans show that the industry doesn't have the appetite to compete on price. Subscribers are moving less between phone companies too, resulting in a "benign competitive environment," in McCormack's opinion.
SHARE ACTION: Sprint shares rose 22 cents, or 4.4 percent, to $5.25 in midday trading. The shares are close to their 52-week high of $5.49, hit a month ago, and have more than doubled since the start of the year.