Sprint (S) Set to Burn Cash but Payday Not Too Far Off

On Thursday Sprint (NYSE: S) reported Q4 results that, in the view of Nomura analyst Mike McCormack, were generally positive.

"Wireless EBITDA service margin [was] flat year over year despite increased smartphone sales. The loss of Nextel subscribers continues to drag service revenue growth, but organic postpaid CDMA net additions were a bright spot," said McCormack.

With $8.2 billion in cash on hand and $4.9 billion to come from Softbank, Sprint has plenty of cash as it enters a heavy period of cash-burn, with $5.9 billion in capital spending estimated in 2013. This spending will eventually lead to improved margin, thinks Nomura.

"Our 2013 Adj. EBITDA estimate increases from $5.3bn to $5.5bn on higher Wireless profitability, rising to $6.9bn in 2014 and $7.6bn in 2015 as Network Vision cost savings come through," concluded McCormack.

Nomura Securities has a Buy rating on Sprint with a price target of $7.00.

For an analyst ratings summary and ratings history on Sprint (NYSE: S) click here. For more ratings news on Sprint click here.

Shares of Sprint closed at $5.74 yesterday.

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