Q3 Preview: Sprint (S) May Be On Track for Best Quarterly Report in Three Years

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Sprint ( S ) is trading higher ahead of the company's third quarter earnings report, expected out before the market opens tomorrow, October 27. Shares are up1.89% in afternoon trading.

The company is expected to report a loss of $0.28 on revs of $8.03 billion. Last quarter, the company posted a loss of $0.25 on revs of $8.03 billion, with the per-share loss coming in wider than views. In Q309, S had a loss per share of $0.17 on revs of $8.04 billion, missing the consensus loss of $0.15 per share on revs of $8.09 billion.

Shares have increased through the quarter, gaining 10.8% to $4.63 at the end of September. Shares are trading 17.2% higher since the start of 2010, and 15.7% lower since the end of the quarter.

Data from Bloomberg has 12 analysts with a Buy rating, 14 with a Hold, and four recommending to Sell. The analyst price target average is $5, with a High of $6 and a low of $3.

Analyst Ratings Through the Quarter

Though not necessarily a rating change ,Wells Fargo kept their Outperform rating on the shares in September, while noting that near term news for the stock, with the rollout of 4G, 3G/4G devices, stable postpaid growth and churn, further debt reduction should be seen as positives for the company.

UBS also added the shares to their Short Term Buy List in September. UBS believes that the company has "1) has begun to grow its postpaid subscriber base after 10M losses over the last 4 years, 2) will achieve wireless service revenue growth in 3Q and gain momentum into 2011 and 3) will not consolidate CLWR during the next capital raise (unlike our original thinking)."

Summary

Deutsche Bank is focusing on post-paid net adds as the headliner for their Q3 results. DB is estimating that S will lose 125,000 or so, but thinks that that is super conservative based on in-line postpaid adds at AT&T ( T ) and Verizon ( VZ ). DB continues their bullishness saying that "S continues to hold its own, likely due to its 4G offerings, and could position the carrier to achieve positive postpaid net adds for the first time in over 3 years. We also expect S to return to revenue growth in 3Q and reiterate our Buy on improving fundamentals." Prepaid net adds are expected to be 300,000, and margins are expected to decline 2.7% sequentially to 16.3%. DB carries a price target of $6 on the shares.

Citi sees Sprint with 100,000 post-paid losses, mitigated by 4G sales and a lower churn rate (1.9%). Citi sees a Q310 loss of $0.33 on revs of $8.04 billion.

Reuters has Sprint adding 250,000 net subs, with a potential three-year record low loss of 37,000 post-paid subs.

Last quarter had the first net subs increase for Sprint since 2007, and many analysts are pegging revs similar to what they earned a year ago.

Sprint still is losing post-paid subs, which are the most lucrative, and aiming more for pre-paid subs. Deutsche may have it dead-on with a 270 basis point drop in margins Q/Q.

Look for comments/updates on their 4G network expansion and relationship with Clearwire (Nasdaq: CLWR). Analysts have had Sprint offering $17.50 per share of Clearwire, though Sprint has since dismissed the talk.

Sprint Nextel Corp. is expected to release their Q310 earnings on Wednesday, October 27, 2010, at approximately 7:00am EDT. Stay tuned to StreetInsider.com's EPS Central section to see our analysis of the highly-anticipated quarterly results within seconds of their release.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Stocks

Referenced Stocks: CLWR , S , T , VZ

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