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Kaufman Bros. Cuts Price Target on Sprint (S), "Management Has Little Credibility Left with Investors"

November 23, 2011 11:40 AM EST
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Price: $23.31 +2.78%

Rating Summary:
    15 Buy, 13 Hold, 0 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 13 | Down: 11 | New: 11
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Kaufman Bros. is maintaining its Hold rating on shares of Sprint (NYSE: S) while lowering its price target from $2.50 to $2.35.

The firm is lowering its Q4 EBITDA estimate from $1.22 billion to $800.5 million due to a lower than expected sales of iPhones. To go inline with its new model, Kaufman is also reducing its FY11 EBITDA estimate from $5.3 billion to $5 billion and its EPS estimate from ($0.79) to ($0.84). For FY11, the firm is forecasting total sales of $33.82 billion.

Due to the incremental cost associated with the launch of Sprint's iPhone, the firm is cutting its FY12 EBITDA estimate from $4.2 billion to $3.4 billion. This new estimate represents a 32 percent decline year over year. For FY12, the firm is forecasting total sales of $36.03 billion.

An analyst at Kaufman comments, "The financial impact from Sprint's iPhone launch coupled with management's decision to more aggressively roll-out their LTE deployment places significant risks on the company's balance sheet and investors, in our opinion. Additionally, we believe the company's spectrum capacity needs due to its "unlimited" promotions, and a continuing battle with its 4G partner adds a tertiary layer of complexity and risk. We believe the existing management has little credibility left with investors in executing on its new long-term plan."

The firm believes that Sprint's management team has little credibility left with investors and its shareholders.

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

Shares of Sprint closed at $2.62 yesterday.


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