Standpoint Research Starts MetroPCS (PCS) at Buy

November 23, 2009 9:31 AM EST

Standpoint Research initiates coverage on MetroPCS (NYSE: PCS) with a Buy rating and $8.50 price target.

The firm said, "When a company with earnings, and a low multiple on those earnings, is trading with Relative Strength of 4 (out of 100), that oftentimes is the sign of a stock that was over-sold and has a favorable risk-reward going forward. PCS seems to fit this situation. PCS has a market capitalization of $2.3 bln and is trading at just 12X estimates for next year. The shares are ~ 85% off the all-time high of $40 from Q3 2007, and ~ 65% off the 52-week high of $19 from April."

Standpoint said their recommendation is being made regardless of whether or not a rumored deal is made with Leap Wireless (Nasdaq: LEAP). They said a another rumored deal with Deutsche Telekom could be possible.

Standpoint also commented, "With the recent attention given to this company -- that had been flying under the radar -- portfolio managers may take notice of this company as it has probably been over-sold and was out-of-favor. Additional support may come from shorts who will decide to cover here and book profits."

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