Analyst Note Offers Explanation For Sprint's Recent Price Action

Sprint Corp S's stock is in a roll after hitting a seven-month high on Wednesday. Shares are now higher by more than 36 percent over the past three months, yet are still lower by 6 percent over the past year.

The Wall Street Journal reported that Macquarie Group's Amy Yong offered an explanation of Sprint's strong gains in a research note on Wednesday.

Sprint's parent company, SoftBank Group Corp SFTBF, recently saw a key executive shuffle. The heir apparent to the company, Nikesh Arora, left the company abruptly this week, and his departure is significant because he had "expressed no clear-cut plan for Sprint during his tenure."

Related Link: SoftBank President Nikesh Arora Leaving Post Amid Investor Pressure

Arora's departure also implies that SoftBank's current CEO Masayoshi Son will stick with the company longer than he previously planned, and his long-term vision for Sprint will stay in place.

Sprint's business has suffered, as it lost ground to peers that have been heavily investing to upgrade their equipment and technology. Meanwhile, Sprint's $33 billion debt load resulted in the company slashing its networking spending to the lowest level since 2010 and has been putting up phones, equipment and airwaves as collateral for its loans.

Yong now thinks major improvements and changes will be brought to Sprint.

"We feel reassured by the positive market reaction this afternoon that Mr. Arora's resignation could usher in a new mindset and investing attitude towards Sprint," the Wall Street Journal quoted Yong as saying in the research note.