Sprint Corp Targets Growth And Positive FCF By Using Low Cost Network Upgrade Strategy

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FBR Capital added Sprint to Alpha Generator list on visibility of long-term growth

Sprint Corp (NYSE:S) is an American telecommunication company which specializes in wireless services. The company ranks among the major Internet carriers globally and is currently the fourth largest among the wireless networks that are operated in the United States. The company holds several subsidiaries such as Boost and Virgin mobile and offers a wide spectrum of services including broadband, text messaging and voice messaging. The headquarters are located in the state of Kansas, United States and it serves more than 58.8 million subscribers currently according to a survey in March this year.

For the past few quarters, the company has been unable to post a positive EPS and this slump in profitability has advocated dramatic cost cuts. It seems that the company is now headed in the right direction as FBR Capital has added the stock in its Alpha Generator List following the company’s plan to opt to low cost network upgrade strategy. Analyst David Dixon, now sees a clear path to long term growth and believes that the company is now closing the gap between itself and competitors.

The company’s capital expenditure guidance is shockingly low and has prompted concerns regarding sustained execution. However, Mr. Dixon is of the view that if the company manages to come true to the challenges its low cost CPE solutions will surely help in leveraging its 2.5 Gigahertz spectrum, which, in turn will help it gain lost ground against rivals. The path to positive Free Cash Flow is also within the realms of possibility given the company manages to stay in line with its capital expenditure guidance.

The analyst believes that Sprint will surely benefit from its low cost strategy and it may very well become one of the fastest data networks in the US. The analyst reaffirmed an Outperform rating and $6 price target. The analyst opinion for Sprint has two Strong Buy, one Buy, 19 Hold, five Underperform and four Sell ratings. The stock has not been traded in the premarket and closed at $3.84 yesterday.

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