David Barden of Banc of America maintained a "buy" rating and $32 price target on Sprint Nextel (nyse: S - news - people ) and updated earnings estimates for the company to capture the latest information now available from the merged company, including third-quarter 2005 results.
"Sprint Nextel remains the best value/growth relationship in our coverage," said the analyst.
Barden lowered Sprint Nextel's 2005 and 2006 estimates for earnings before interest, taxes, depreciation and amortization to $14.12 billion and $16.15 billion, respectively, from $14.16 billion and $16.4 billion. He lowered 2005 and 2006 earnings-per-share estimates to $1.18 and $1.07, respectively, from $1.23 and $1.19. He raised the 2006 pro forma revenue estimate to $47.4 billion from of $47.2 billion.
"Sprint Nextel's exposure to the positive fundamentals of the wireless business is undervalued due to overhanging concerns about the industry and merger-related issues," said the analyst. "The stock should appreciate as management demonstrates the ability to grow the business and extract synergies, resolve affiliate issues and split the company into growth and value components."
In its coverage of wireline and wireless telecommunications services, Banc of America's top picks are Sprint Nextel and Alltel (nyse: AT - news - people ), both rated at "buy" with respective price targets of $32 and $70. Its least favorite is CenturyTel (nyse: CTL - news - people ), rated at "neutral" with a $31 price target.
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