UPDATE: Bank of America Maintains Metro PCS at Underperform on Lowered Revenue Estimate

In a report published Monday, Bank of America maintained its Underperform rating and $9 price objective on Metro PCS

Bank of America reported that, “We have updated our estimates for standalone T-Mobile and the pro forma T- Mobile/PCS entity following 4Q results and lowered our expectations for revenue and EBTIDA, primarily on softer pre-paid trends. Compared with the guidance given at Deutsche Telekom's Capital Markets day on December 6, 2012 we are more conservative in our revenue expectations but generally consistent with the company's own statements on EBITDA (reported), subscribers, capex and working capital. From a valuation perspective however, we believe investors have not fully adjusted for T-Mobile's accounting for Value plans, which run smartphone-related costs primarily through the cash flow statement as opposed to the income statement, inflating EBTIDA relative to other carriers and understanding valuation using the most common EV/EBITDA approach. We maintain our Underperform rating and $9.00 PO, which includes the $4 cash dividend expected at merger close, and assumes a generous 5.0x '14E EV/ EBITDA multiple on a fully adjusted, comparable basis.” Shares of Metro PCS closed at $10.81 on Friday.