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Morgan Stanley upgraded Sprint PCS (PCS
) to outperform from neutral.
Analyst Luiz Carvalho says he feels more comfortable with the wireless telecom company given recent funding news and positive first quarter indications. Although risks still exist, he believes the stock should act well going into the summer, he says. He notes that the company has successfully obtained some $6.5 billion in new credit. This amount effectively meets all obligations and extra cash needed for operations for 2002.
However, some caution is warranted and fundamental difficulties remain, he says. With wireless carriers engaged in a price war, he believes cutting costs in order to drive profitability is crucial. He set a $17 year-end 2002 price target on the stock.