Sprint is one of the most exciting turn-around stories in the market right now. The company is in the second year of its 5-year around plan and it is beginning to see results. There are several positive catalysts surrounding this telecom giant that we will analyze throughout this piece.
In the last three months Sprint is up 47%, a remarkable gain. While competitors Verizon and ATT have set their sights on capturing high value clients, lower cost carriers Sprint and T-Mobile have focused on stealing away customers from their bigger competitors. It’s working. Sprint has its lowest churn rate in its 21 year mobile history, the most important metric for a telecom company.
Sprint has said to receive 4-5 times more orders for Apple’s new iPhone 7 than past models.
This is for two key reasons:
-Unlimited data is becoming increasingly important to mobile users, especially to the data hungry millennial consumer. Data has become the primary use of smartphones, cellular service is just not as important as it used to be.
-Cost effective. The lower cost carriers are catching up. In the past, premium providers Verizon and ATT users looked down upon the lower cost carriers. As smartphones have become essential to our everyday lives, consumers are fed up with getting gouged with data overages when unlimited data is becoming the norm.
Many have speculated about a T-Mobile Sprint merger, which has been rumored to happen for years. Sprint even did make a play to acquire T-Mobile in 2014, but was met with skepticism from the FCC. It has been said that the mergers approval could hinge on the upcoming elections, with Recon Analytics Roger Entner saying, “the merger certainly could (happen) under a Republican president”.
Whether a merger does happen, there are many reasons to be bullish on Sprint as its sentiment is starting to turn around and the stock price is reflecting it. The company has solid management in place and the company is committed to growth. All of Sprint’s employees have an incentive package tied to the wireless carrier’s turnaround; meaning no equity will be offered until the stock price hits the $8 mark.
We have every reason to believe Sprint will hit the $8 price target, and the next earnings report should reflect the positive results Sprint has been garnering through its turnaround plan.
“Yes, Sprint is not better than Verizon yet, but we are the comeback story,” said CEO Marcelo Claure.
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