From Standard & Poor's Equity Research
Bear Stearns downgraded Sprint Nextel (S) to peer perform from outperform, noting that the company had a weak second quarter.
Analyst Phil Cusick says Sprint's $10.0 billion revenue vs. his $10.6 billion estimate is 5% lower than expected. He says Sprint's lowered guidance for revenue and earnings before interest taxes depreciation and amortization (EBITDA,) in addition to its raised guidance for capital expenditure, effectively squeezes free cash flow generation for the year. Sprint also announced a $6 billion stock buyback, below the $10 billion he was looking for. While the stock may seem cheap on a valuation basis, he does not expect a turnaround in operational and financial metrics until 2007 or beyond.