Shares of Sprint Nextel Corp. got a boost Wednesday after a Citi Investment Research analyst upgraded the telecommunications company and said a combination with T-Mobile USA in the next 12 months is more likely than not.
Analyst Michael Rollins upgraded Sprint to "buy" from "hold" and raised his target price on the stock to $5.50 from $5. He put the chance of a merger between Sprint and Deutsche Telekom-owned T-Mobile at 55 percent. In September, Rollins put the likelihood of such an acquisition at under 30 percent.
"We believe Sprint may reconsider its strategic options during the first-half of 2010, while it continues to improve its sales productivity and cut costs for which we expect additional programs to be announced during the first quarter," wrote Rollins in a note to investors Wednesday.
The analyst also expects Sprint to improve its losses of contract _ or "post-paid" _ subscribers over the next six months.
Sprint declined to comment.
Shares of the Overland Park, Kan.-based company rose 22 cents, or 5.6 percent, to $4.13. The stock has traded between $1.83 and $5.94 in the past 52 weeks.
