Analysts Go to War over New Sprint Stock Value: One Says $8, One Says $5

The report said, “We are reinstating Sprint at Underperform with a price objective of $5 based on our view that the company’s valuation relative to our understanding of New Sprint’s strategy is unsubstantiated. Just prior to the reports that Sprint was in talks with Softbank in September 2012, we rated Sprint Buy based on a 5.7x forward year valuation at the time. We are revising 13/14/15E EPS from ($0.83)/$0.32/$0.84 to ($0.77)/($0.17)/$0.34.”

The only good news in the report is that the Merrill Lynch report does at least say that Sprint now has an aggressive new owner with a successful record and willingness to inject new capital. The firm also believes that SoftBank is expected to negotiate savings on its existing contracts under new ownership as well.

Sprint shares are actually up by 3.1% at $6.65 in mid-Monday trading, which implies that Sprint’s “NewCo” shares have about 25% downside.

Last week’s upgrade was from Cowen & Co. and the firm raised the rating to Outperform with an $8 price target, and full details of that call are here.