Ahead of the Bell: Sprint Nextel jumps on upgrade

AP News
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Posted: Nov 16, 2009 8:54 AM

Sprint Nextel Corp. shares rose ahead of regular trading Monday after Credit Suisse upgraded the wireless carrier, predicting the company will stop losing net subscribers in the last few months of the year.

Sprint, the third-largest carrier in the U.S., has been hemorrhaging money and subscribers. In response it has looked to improve its customer service operations and add new smart phones to its slate, including Palm Inc.'s Pre.

In a note to investors, Credit Suisse analyst Jonathan Chaplin upgraded Sprint to "Outperform" from "Neutral" and raised his share price target to $6 from $4.

Chaplin said Sprint's subscriber base should remain flat in the fourth quarter, helped by the growth of cheaper, prepaid calling plans. That would be the first time in two years that Sprint's customer base hasn't shrunk.

He expects the company to add 300,000 subscribers in 2010. On top of that, Virgin Mobile USA, which Sprint has agreed to acquire for $483 million, should add 1.2 million subscribers, Chaplin said.

Sprint shares jumped 27 cents, or 9 percent, to $3.37 in premarket trading. The stock has ranged from $1.35 to $5.94 over the past year.