UPDATE: Nomura Upgrades MetroPCS Communications to Neutral Ahead of TMobile Merger

In a report published Friday, Nomura upgraded its rating on MetroPCS Communications

from Reduce to Neutral, and reiterated its $9.50 price target. Nomura noted, “Limited near-term risks, upgrade to Neutral. With shares trading near our price objective, and down 20% since early October versus a 4% rise in the S&P 500 index, we are upgrading MetroPCS shares from Reduce to Neutral, but maintaining our target price of $9.50. Near term, we see low integration risk from the merger with TMobile, few operational hurdles, and limited downside to current valuation. However, our near-term outlook is tempered by continued uncertainty regarding the ability to turnaround the postpaid business longer term. MetroPCS shares trade at 4.5x our 2013 EBITDA estimate, pro forma for the T-Mobile merger, which we believe is reasonable given the long-term difficulties still faced by the business. Near term, we don‟t see many obstacles to NewCo‟s strategic plans. We remain skeptical this transaction solves the most significant NewCo challenge of turning around postpaid.” MetroPCS Communications closed on Thursday at $9.78.