) from its Recommended List, down from its Market Outperform list.
Analyst Paul Wuh says the company's new business model relies more on account spending limit (ASL) subscriptions, which reduces valuation. He says values for ASL, non-ASL and prepaid users are $220, $569 and $118, respectively. While he believes ASL subcriptions are value-added and will help Sprint PCS grow market share by profitably penetrating a less-tapped segment, the risk is increased until there is more clarity on how the company manages its ASL base.
Wuh cuts his 2002 earnings before interest, tax, depreciation and amortization estimate of $3.3 billion to $2.8 billion. His new 12-month target, which is based on 16 times his 2002 estimated EBITDA multiple, is $28.