UBS believes key issue for Sprint Corporation is its uncertainty to grow subscription base
Sell Side Firm UBS in its report on Sprint Corporation (NYSE:S) mentioned that it believes the key issue pertaining the company is the uncertainty whether it would be able to grow its subscription base or not. Moreover, would it be able to redirect itself on path of revenue growth for sustainable period of time is also a concern.
The report mentioned that company is cutting its cost base very aggressively, which also includes costs incurred in lieu of marketing which is making it difficult for Sprint to attract or make further gross additions.
Similarly, the reduction in Capital Expenditure (CAPEX) would also make the continuation in churn gains to be more difficult, as its network performance improvement would be in a pause. The report mentioned that company is missing the service revenue growth aspect which is contributing downside to company.
Moreover, it stated that liquidity concerns are a bit eased up, but is it possible to witness a stream of revenue growth amidst the heavy cost cuttings by the company?
Sprint currently trades at $3.57, and stock has already declined by around 1.38% Year-to-Date (YTD). The poor stock performance is justified since market has punished the stock because of company’s deteriorating operational income. Adding fuel to the fire was company’s postpaid churn which is on increasing rate, on the other hand, its postpaid phone net additions are on a decline. In past one year of trading, stock has declined by hefty 26.61% which reflects investors lost confidence in the stock.
The average Price Target for stock by analysts at the Street is of $7.28, which represent significant upside potential inherent in it. The most bullish and bearish estimates for stock are $9 and $6 respectively.
Out of 30 analysts covering the stock, majority of the analysts i.e. 18, have Hold rating, while 5 rate it as Underperform. Four analysts rate it as Sell, while one and two rate it as Buy and Strong Buy respectively.