Canaccord Genuity Maintains a 'Hold' on MetroPCS (PCS); Changes to Credit Terms?

Canaccord Genuity maintains a 'Hold' on MetroPCS (NYSE: PCS) price target of $12.00 (from $8.00).

Analyst, Greg Miller, said, "Now that the majority of the US wireless carriers have reported, we believe it is becoming increasingly clear that the entire industry has begun to focus on margins, cash flows and returns on invested capital over heavily subsidized market share gains. Nowhere is that trend more present than in the 2Q12 results posted by MetroPCS, where services revenues essentially met expectations and EBITDA margins exceeded expectations by more than last year’s miss of expectations that led to a downdraft of similar magnitude as the 2Q12 rally. Given the annual volatility and uncertainty of the company’s future, we continue to remain HOLD rated on the shares."

"Too good to be true? Although it is not clear at this time, the company made no mention in its quarterly documentation of changes in its credit terms with consumers or if the company runs the risk of higher bad debt expenses from allowing the consumer to pay down the handset over time. If the sudden and dramatic change in margin performance is simply the result of shifting the burden of the handset expense to a credit challenged customer from the company, we would view the change as far less significant."

For an analyst ratings summary and ratings history on MetroPCS click here. For more ratings news on MetroPCS click here.

Shares of MetroPCS closed at $8.59 yesterday.

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