Sprint Corp (NYSE:S) has a new trick up its network planning sleeve with High Performance User Equipment (HPUE), which the mobile network giant introduced in a tech-focused analyst session in New York City to enhance overall service performance.
Though Nomura analyst Jeff Kvaal remains sidelined, he is encouraged as S “pushes the 2.5GHz envelope,” and therefore reiterates a Neutral rating on S while boosting the price target from $6 to $8, which represents a just under 4% downside from where the shares last closed.
Kvaal declares, “HPUE joins a roster of other techniques Sprint is using to maximize the performance of its 2.5GHz spectrum and, hence, its network. None of these is radically new, which investors may appreciate. Dialog with Sprint’s CTO, Tech COO, and CFO assuage, if not eliminate, our capex concern.”
Moreover, the analyst commends the 2.5GHz coverage envelope expansion, explaining, “By boosting the phone’s power output, HPUE expands 2.5GHz cell sizes to nearly match 1.9GHz. This lowers capex needs, primarily where coverage, not capacity, is a constraint. HPUE phones should roll out in 1H17. This addresses one of our concerns: that Sprint’s national customer base did not align well with its metro-focused 2.5GHz build.”
However, “Several network questions remain; strategic ones emerging. Sprint uses microwave for ~40% of its macro sites; peers use fiber. Slow capex on small-cell permit issues could affect customer behavior. Strategically, as video shifts to mobile and industry norms reset (T/TWX, new administration), Sprint believes time is on its side, not cable’s,” Kvaal contends.
Ultimately, for the analyst, “Sprint’s network story is improving,” and while he tiptoes on the side of caution for now, there could be some light at the end of the tunnel for S.
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, five-star analyst Jeff Kvaal is ranked #276 out of 4,274 analysts. Kvaal has a 63% success rate and earns 12.1% in his yearly returns. When suggesting S, Kvaal earns 0.0% in average profits on the stock.
TipRanks analytics demonstrate S as a Hold. Based on 9 analysts polled by TipRanks in the last 3 months, 3 rate a Buy on S, 4 maintain a Hold, while 2 issue a Sell. The 12-month average price target stands at $6.41, marking a 23% downside from where the stock is currently trading.