Wednesday, January 5, 2011

Sprint (NYSE:S), MetroPCS (NYSE:PCS), Leap Wireless's (Nasdaq:LEAP) Prepaid Demand Remains Strong

Citing channel checks in the fourth quarter, Deutsche Bank (NYSE:DB) said they see that having a positive impact on companies strongly exposed to the sector, including Sprint (NYSE:S), MetroPCS (NYSE:PCS) and Leap Wireless (Nasdaq:LEAP), among others.

Deutsche said, "We have 2 positive takeaways from our 4Q channel checks for MetroPCS, which covered over 80 stores across the company's 14 major markets. (1) Demand remains strong for PCS' prepaid services and we are increasing our 4Q net add estimate to 425k (consensus 393k) from 350k. (2) Rate plan mix continues to improve, which implies that our 2011 ARPU and EBITDA estimates may be conservative.

"We also contacted nearly 60 channels selling other prepaid brands such as Boost and Virgin (Sprint (NYSE:S)), Straight Talk (TracFone), and Cricket (Leap Wireless (Nasdaq:LEAP)). Our key takeaway is that Sprint saw strong prepaid demand during 4Q, especially for Boost, which suggests potential upside to our prepaid net add est of 650k."

Deutsche Bank maintains a "Buy/Top Pick" on MetroPCS, which closed Tuesday at $13.92, gaining $0.85, or 6.50 percent. They raised their price target on them from $15 to $20.

Sprint closed at $4.45, losing $0.06, or 1.33 percent. Leap Wireless closed Tuesday at $13.50, up $0.09, or 0.67 percent.

3 comments:

Anonymous said...

I think Tracfone's Straight Talk is a winner. They are coming out with new smartphones (Nokia E71) and they offer the best unlimited plan that I have found. Tracfone has always been a very competitive company.

Anonymous said...

The one definite thing tracfone has that other companies don't seem to want to have, is a properly tiered option of plans. There are very very few companies / carriers that seem interested in selling plans that are small. The entire focus has fallen on smart phones, and massive unlimited plans, and in the mean time the majority of cell phone owners are going unnoticed, and uncompeted for. This does not bode well for the fruits of a free market.

Jason said...

I have seen many of my friend's Straight Talk phones and I was impressed. I am particularly impressed with the Nokia E71 Smartphone. I have always been a Nokia fan and I am always an even bigger fan of no contract.