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Sprint: Higher Target Prices Before Its Q1 Earnings

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Sprint’s earnings and revenue

Sprint (S) is the fourth-largest wireless service provider in the US. Last week, T-Mobile (TMUS) and Sprint officially received approval from the Department of Justice for their $26.5-billion merger. However, the deal still faces some challenges. Read T-Mobile: A Look at Q2 Results as It Awaits Merger Approval and T-Mobile–Sprint Merger Faces More Uncertainty to learn more.

Sprint will likely report its first-quarter earnings results on Friday. The first quarter ended on June 30. Analysts expect Sprint’s adjusted EPS to reach -$0.04 in the first quarter—compared to $0.04 in the first quarter of fiscal 2018. Analysts expect the company’s total revenues to fall 0.8% YoY (year-over-year) and reach $8.1 billion in the first quarter. The company will likely report net losses of 200,000 postpaid phone customers and 50,000 prepaid customers.

Analysts’ target prices 

On Monday, UBS and Citigroup raised their respective target prices for Sprint stock before its earnings announcement. UBS upgraded the stock from “neutral” to “buy” and raised its target price from $6.50 to $10. Citigroup raised its target price for the stock from $6.50 to $8.

Among the 19 Reuters-surveyed analysts covering Sprint, three recommended a “buy,” 13 recommended a “hold,” and three recommended a “sell.” On average, analysts have given the stock a 12-month target price of $6.75, which implies a fall of 13.2% from its closing price of $7.78 on Monday. The median target price for the stock is $6.25.

Stock returns

As of Monday, Sprint has risen 33.7% in 2019. The stock has risen 41.7% in the last 12 months. Notably, Sprint stock is trading 45.1% above its 52-week low of $5.36. However, the stock is just 3.5% below its 52-week high of $8.06. While Sprint stock has been impressive in 2019, the stock has risen 30.1% in the last three years and 7.3% in the past five years. T-Mobile and AT&T (T) have risen 29.5% and 20.3%, respectively, year-to-date.

In the second quarter, T-Mobile reported an adjusted EPS of $1.09—a rise of 18.5% on a YoY basis. In contrast, AT&T reported an adjusted EPS of $0.89—a fall of 2.2% on a YoY basis.

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