Canaccord Genuity on Telecom: Smartphone Drives Revisions to Estimates and Price Targets
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Today's Overall Ratings:
Up: 11 | Down: 12 | New: 13
Rating Summary:
18 Buy, 30 Hold, 2 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 11 | Down: 12 | New: 13
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Canaccord Genuity on Telecom: Smartphone Drives Revisions to Estimates and Price Targets
Analyst, Greg Miller, said, "With the Q1/12 reporting season now behind, we believe it is increasingly clear that the two largest carriers 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, we now believe it necessary to adjust our estimates and associated price targets to reflect this dynamic. We are increasing our price targets on Verizon (NYSE: VZ) and AT&T (NYSE: T) to $41.00 and $35.00 from $36.00 and $32.00, respectively."
"Despite the increase in smart phone penetration and associated increases in ARPU, we are increasingly less optimistic on the outlook for Leap Wireless (Nasdaq: LEAP) and MetroPCS (NYSE: PCS) on the belief that spikes in handset subsidies and operating costs will continue to overshadow the benefits of ARPU improvement. We are reducing 2013 EBITDA from $773M to $746M for LEAP and from $1,264M to $1,253M for PCS. Accordingly, we are lowering our price targets on PCS and LEAP to $8.00 and $7.00 from $9.00 and $9.00, respectively."
Analyst, Greg Miller, said, "With the Q1/12 reporting season now behind, we believe it is increasingly clear that the two largest carriers 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, we now believe it necessary to adjust our estimates and associated price targets to reflect this dynamic. We are increasing our price targets on Verizon (NYSE: VZ) and AT&T (NYSE: T) to $41.00 and $35.00 from $36.00 and $32.00, respectively."
"Despite the increase in smart phone penetration and associated increases in ARPU, we are increasingly less optimistic on the outlook for Leap Wireless (Nasdaq: LEAP) and MetroPCS (NYSE: PCS) on the belief that spikes in handset subsidies and operating costs will continue to overshadow the benefits of ARPU improvement. We are reducing 2013 EBITDA from $773M to $746M for LEAP and from $1,264M to $1,253M for PCS. Accordingly, we are lowering our price targets on PCS and LEAP to $8.00 and $7.00 from $9.00 and $9.00, respectively."
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