Credit Suisse Raises Price Target on Leap Wireless (LEAP), Pre-announced Guidance Shows Upside

Credit Suisse is maintaining its Neutral rating on shares of Leap Wireless (NASDAQ: LEAP) as the firm does not have the full picture of the company's results for ARPU, CPGA, and CCU sales.The firm is raising its price target to $14 from $11 due to LEAP's pre-announced 1Q results with net adds of ~300 thousand and a churn of less than 3.5%. Credit Suisse was predicting net adds of 157 thousand and a churn of 3.6%.

The firm reports that margins should be pressured as gross adds are higher than expected. To go inline with LEAP's new guidance, Credit Suisse is raising its 1Q11 and 2011 EBITDA/sub forecast estimates to $10.43 and $9.26 from $9.78 and $9.01. The firm is also raising its 2011, 2012, and 2013 EPS estimates to ($2.37), ($1.55), and ($0.84) from ($2.42), ($1.79), and ($1.26).

Credit Suisse comments that, "while results suggest improving subscriber trends, Leap rose 16% yesterday driven by M&A speculation following the AT&T-T-Mobile M&A announcement."

For more ratings news on Leap Wireless click here and for the rating history of Leap Wireless click here.

Shares of Leap Wireless closed at $14.05 yesterday.

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