Credit Suisse analyst Jonathan Chaplin advised investors to go long MetroPCS (PCS) heading into the company’s Q1 earnings announcement on Thursday. He thinks PCS will report stronger than expected results.
Chaplin also sees two coming events that should provide support to current pricing in the pre-paid wireless market. One, he notes that Sprint (S) will unveil a new pre-paid strategy next week that he says will be aimed at segmenting subscribers, and not pressure ARPU. Chaplin also notes that a smaller pre-paid operator called Page Plus is planning to boost its price of its unlimited text, talk and 20 MB of data plan to $45 from $40 on May 18.
“We remain bearish on the [telecom] sector in general, and the pre-paid carriers in particular, based on the a thesis that ARPU will decline, pressing margins and equity values,” he writes. “However, we believe near-term data points will challenge our thesis, causing valuations to rise, particularly for pre-paid carriers who have forced most of the pressure.”
Despite the call PCS is down 7 cents, at $7.70.
No comments:
Post a Comment