Why Sprint Shares Soared

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Sprint (NYSE: S  ) rose more than 10% during intraday trading Friday following positive analyst comments and speculation the wireless carrier could be close to announcing a deal to acquire rival T-Mobile US (NYSE: TMUS  )

So what: First, Wells Fargo analyst Jennifer Fritzsche reaffirmed her outperform rating on Sprint stock, raising both the top and bottom ends of her valuation range by more than 40%, to $11-$11.75 per share. Despite her long-term bullishness, however, Fritzsche admitted her channel checks indicate Sprint will likely lose as many as 420,000 subscribers this quarter, or more than double the number she previously expected.

In addition, several reports have indicated that SoftBank, which owns an 80% stake in Sprint, has held informal talks with T-Mobile parent Deutsche Telekom regarding whether it would be willing to part with its stake in the fourth-largest U.S. mobile carrier. Specifically, the reports say, SoftBank would be willing to pay more than $19 billion for control of as much as 60%-70% of T-Mobile, perhaps as early as next spring.

Now what: Even if Deutsche Telekom decides it wants to sell, keep in mind the deal would not only need to overcome financing and regulatory challenges, but would also encounter lofty technical hurdles involved with integrating the two companies' respective disparate CDMA and GSM network technologies.

Even though investors seem to like the idea of further consolidation in the wireless carrier space, I personally wouldn't count on such a merger as part of an investment thesis for Sprint stock. Until Sprint can prove it has what it takes to stem the bleeding without acquiring T-Mobile, you'll find me on the sidelines.

Consider the nine solid picks in this free report instead

Dividend stocks can make you rich. It's as simple as that. While they don't garner the notoriety of high-flying growth stocks, they're also less likely to crash and burn. And over the long term, the compounding effect of the quarterly payouts, as well as their growth, adds up faster than most investors imagine. With this in mind, our analysts sat down to identify the absolute best of the best when it comes to rock-solid dividend stocks, drawing up a list in this free report of nine that fit the bill. To discover the identities of these companies before the rest of the market catches on, you can download this valuable free report by simply clicking here now.


Read/Post Comments (0) | Recommend This Article (6)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2777657, ~/Articles/ArticleHandler.aspx, 11/28/2014 3:59:42 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement