Canaccord Genuity Morning Coffee on AT&T (T), Leap Wireless (LEAP), MetroPCS (PCS), Verizon (VZ): Dialed In
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Price: $36.62 -0.87%
Rating Summary:
5 Buy, 26 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 28 | New: 14
Rating Summary:
5 Buy, 26 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 28 | New: 14
Trade T Now!
Canaccord Genuity Morning Coffee on AT&T (NYSE: T), Leap Wireless (Nasdaq: LEAP), MetroPCS (NYSE: PCS), Verizon Communications (NYSE: VZ): Dialed in.
With the Q1/12 reporting season now behind, Canaccord Genuity Telecommunications Analyst Greg Miller believes it is increasingly clear that the two largest carriers, AT&T and Verizon, are disproportionally benefiting from smart phone acceleration just as discount carriers struggle to offset higher costs associated with the migration from voice to data. With yet another series of data points in, Miller now believes it is necessary to adjust his estimates and raise his price targets for AT&T and Verizon to reflect this dynamic. Verizon and AT&T demonstrate stability with some pockets of strength. With continued ARPU growth driven by smart phone penetration, along with solid cost management in the face of stable iPhone subsidies, he believes it is possible to witness accelerated wireless service revenue and profit growth at Verizon and to a lesser degree AT&T. Should the largest carriers gain a greater control over iPhone subsidies, Miller says investors would likely witness meaningful margin improvement from here. Despite the increase in smart phone penetration and associated increases in ARPU, he is increasingly less optimistic on the outlook for Leap Wireless and MetroPCS on the belief that spikes in handset subsidies and operating costs will continue to overshadow the benefits of ARPU improvement. He is lowering his estimates and sales targets for both Leap and MetroPCS. Regarding industry consolidations, Miller is doubtful that we will witness consolidation in the prepaid segment of the market while AT&T, Verizon and even Sprint (NYSE: S) become more competitive in the value segment. Recently, both PCS and LEAP had significant and repeated spikes in valuation upon such misguided speculation. Miller believes it is entirely possible that the persistent speculation is nothing more than posturing and that Leap Wireless and MetroPCS end up together ultimately.
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With the Q1/12 reporting season now behind, Canaccord Genuity Telecommunications Analyst Greg Miller believes it is increasingly clear that the two largest carriers, AT&T and Verizon, are disproportionally benefiting from smart phone acceleration just as discount carriers struggle to offset higher costs associated with the migration from voice to data. With yet another series of data points in, Miller now believes it is necessary to adjust his estimates and raise his price targets for AT&T and Verizon to reflect this dynamic. Verizon and AT&T demonstrate stability with some pockets of strength. With continued ARPU growth driven by smart phone penetration, along with solid cost management in the face of stable iPhone subsidies, he believes it is possible to witness accelerated wireless service revenue and profit growth at Verizon and to a lesser degree AT&T. Should the largest carriers gain a greater control over iPhone subsidies, Miller says investors would likely witness meaningful margin improvement from here. Despite the increase in smart phone penetration and associated increases in ARPU, he is increasingly less optimistic on the outlook for Leap Wireless and MetroPCS on the belief that spikes in handset subsidies and operating costs will continue to overshadow the benefits of ARPU improvement. He is lowering his estimates and sales targets for both Leap and MetroPCS. Regarding industry consolidations, Miller is doubtful that we will witness consolidation in the prepaid segment of the market while AT&T, Verizon and even Sprint (NYSE: S) become more competitive in the value segment. Recently, both PCS and LEAP had significant and repeated spikes in valuation upon such misguided speculation. Miller believes it is entirely possible that the persistent speculation is nothing more than posturing and that Leap Wireless and MetroPCS end up together ultimately.
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