Wireless stocks Nextel Communications (Nasdaq: NXTL) and Sprint PCS (NYSE: PCS) should see some interest Friday after their price targets were upped. Banc of America Montgomery analyst Steven Yanis also set an acquisition price on Nextel.
Yanis raised operating estimates and valuation for Nextel in a research report which cited the wireless communications company's impressive year to date operating results.
Nextel shares were up 2 3/16 to 54 15/16 Friday. The company's stock has bounded ahead over the past few months even though the company missed second-quarter estimates, as it's seen as a tantalizing takeover target.
Nextel's target price for year-end 2001 was increased from $47 (split adjusted) to $66 per share. Yanis also set a 2001 year-end acquisition price of $79 per share on the stock, "to account for the potential synergies that could be realized by a domestic telecommunications operator acquirer."
Subscriber estimates were raised an average of 15 percent from 2001 to 2006, and increasing average revenue per unit $4-5 or approximately 7 percent, during the same time period. Nextel's expected budget was raised to reflect increased subscriber growth and usage assumptions.
Sprint PCS also had its targets upped due to the company's strength in an "overall robust wireless market."
Shares were up 1 13/16 to 55 5/16 Friday morning.
Yanis raised its subscriber addition estimates by 32 percent and average revenue per unit by eight percent on average over the next seven years. He also raised capital expenditure estimates to account for the increases and improvements in the network required for higher anticipated traffic.
As a result of estimate changes, Sprint's year-end 2001 target price has been increased from $55 to $75.
"Sprint PCS has continued to garner the largest share of net additional subscribers ... and make significant progress in reducing their churn rate," Yanis said in a research note.