24/7 Wall St. 2007 Price Forecast: Sprint, $22

Over the next week 24/7 Wall St. will set mid-year price targets (June, 30, 2007) for the sixty most widely traded stocks. These targets will be based on past price performance, industry activity, forward projections of financial performance, outside analyst opinions, and research conducted for doing past articles on these firms. The price targets assume flat markets over the next six months. In other words, if the Nasdaq moved up 25% between now and mid-year, the target share price targets would probably be too low. If the market moved down by 20%, they would probably be too high

Sprint/Nextel. (S) Sprint disappointed the market by saying next year would be mediocre, at best. The stock fell below $18 on the news. DeutscheBank cut the stock to "sell" and called the forecast "abysmal". Other downgrades are sure to follow. Who knows, the CEO could lose his job. Several other top official have already left.

Sprint was not exactly doing well before all of this. Its stock is down 15% over the last yeast. Its integration of the Nextel business has gone badly. It is adding fewer new subscribers that rivals Cingular and Verizon Wireless.

Sprint does have some gas left in the tank. The most important part of its strategy going forward is a national WiMax network that will reach 100 million people. Nokia has signed on as a supplier. So have Samsung and Motorola. And, Intel is the biggest backer of WiMax in the world. It will make the chips to take the signal.

WiMax is already up and running in places like Korea, but with so many large tech companies making a big bet, WiMax has to get a foothold in the US. And, Sprint is their horse in the race.

Sprint is independent. Cable companies need a partner to offer cellular services to compete with the telecoms, especially Verizon and Cingular (part of AT&T). That is not a bad position to have. The company has 52 million customers, and cable companies would like to see that number rise to weaken their competitors for the "triple" play of voice, TV, and broadband.

With bad news taking the stock down, any good news is likely to cause a fairly share rebound. Sprint has it gun loaded. Now the market wants to see it fire.

Factors that could cause the stock to rise above forecast: Sprint has indicated that 2007 will be flat with 2006. Any sign that it is doing better would be a big relieft.

Factors that could cause the stock to fall below forecast: If Sprint cannot pick up the rate at which it adds new subscriber and cut "churn" (customers dropping the service who have to be replaced), even faith in the future of WiMax may not hold the stock up.

Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.