Why United States Cellular Corporation Shares Soared Today

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 United States Cellular Corporation (NYSE: USM  ) jumped 10% Monday after JPMorgan Chase upgraded the stock.

So what: Remember, U.S. Cellular stock plunged nearly 10% last Wednesday after the company turned in disappointing fourth-quarter results, thanks primarily to troubles converting to a new billing and operational support system which negatively affected churn.

However, JPMorgan analyst Philip Cusick thinks the worst of those issues have passed and so upgraded the stock to "overweight" from "neutral" and assigned a $76-per-share price target. To explain the change, Cusick suggested even though U.S. Cellular's first quarter results likely won't be pretty, he sees churn returning to normal by the end of Q2. By Q3, he says, it could see its first postpaid subscriber increase in over four years.

Now what: Even so, that doesn't exactly negate competitive disadvantages and pricing pressures U.S. Cellular is facing from goliath competitors like AT&T and Verizon right now. To be sure, that's a primary reason U.S. Cellular decided to forgo providing 2014 revenue and earnings guidance last week. In the end, whether U.S. Cellular stock appears underpriced now is little consolation for investors if it can't compete over the long term.

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