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Macquarie Adjusting 2015 Forecasts After Sprint Opens 1,400+ Former RadioShack Stores

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Macquarie on Monday issued a company update on Sprint Corp (NYSE: S) following Sprint’s opening of 1,435 (formerly RadioShack) stores on Friday. Macquarie rates Sprint as Outperform with a one-year price target of $7.25.

Analysts Kevin Smithen and Will Clayton wrote, “We are adjusting our 2015 forecasts for the estimated ~$190 million in incremental annual rent, utility and wage expense...We believe that the RadioShack deal will create value for Sprint shareholders over the long term, but the market needs to digest the near-term EBITDA dilution. We continue to feel that churn trends at Sprint may be improving more quickly than the market expects.”

Macquarie believes that the new stores will conservatively boost Sprint’s postpaid net adds by 300,000 per year assuming monthly gross adds at 50 percent of an average current Sprint-owned store. The firm lowered 2015 and 2016 EBITDA forecasts for the new store costs, but raised their 2018 and beyond EBITDA to reflect the higher postpaid sub count.

A previous article on Benzinga explored the RadioShack-Sprint deal and what it would mean to consumers.

Agathe Blanchon-Ehrsam, CMO of Vivaldi Partners Group, told Benzinga at the time, "I also wouldn't say that people were lining up to go to RadioShack stores. Changing the signage out front won't really change things overnight for Sprint.”

Shares of Sprint last traded at $4.97.

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Mar 2018GuggenheimInitiates Coverage OnSell
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Posted-In: Kevin Smithen Macquarie radioshack Will ClaytonAnalyst Color Analyst Ratings


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