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Why Analysts Recommend a ‘Hold’ on Sprint


May. 24 2019, Published 1:29 p.m. ET

Analysts’ recommendation

Out of the 20 analysts covering Sprint (S), 15 analysts have rated the stock a “hold,” while two analysts rated the stock a “buy” rating. Three analysts have given the stock a “sell” rating. It seems analysts want to wait and see if Sprint will get approval from the antitrust division to merge with rival T-Mobile amid several regulatory concerns. Analysts have set a target price of $6.24 for the stock, which implies a discount of 10.2% based on its closing price of $6.95 on May 23.

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Sprint’s performance

Sprint has been focusing on unlimited phone plans to attract more customers. The company has also been making serious efforts to cut its costs to revive its profits in the wireless space. The company has eliminated more than $1 billion in costs in each of the past four straight years with a total of approximately $6.0 billion in cost savings over the last four years.

In fiscal 2018 too, the company achieved gross cost reduction of $1.2 billion with a net cost reduction of $33 million as the company plans to reinvest in the Next-Gen Network, digital capabilities, and other initiatives.

The company also posted adjusted EBITDA of $3.14 billion in the fourth quarter of fiscal 2018, higher than both the year-ago quarter and the preceding quarter due to cost reduction initiatives. Sprint’s adjusted EBITDA of $12.8 billion was also 15.4% higher than the last year.


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