Shares of Clearwire Corp. rose Tuesday after an analyst said the company's path to growth seemed more certain following a round of financing that will give it the capital needed to grow its wireless data network.
UBS analyst John Hodulik upgraded the stock to "Neutral" from "Buy."
He said Clearwire, which provides mobile broadband services, has the funds for expanding its high-speed wireless Internet access to more cities, add capacity to markets it already serves and improve signal strength and customer service.
Earlier this month, the company said it will receive $1.56 billion from investors and issue $1.6 billion and $920 million in two debt offerings.
Financing is critical for Clearwire, which provides next generation mobile broadband based on WiMax technology. WiMax competes with LTE, a mobile broadband technology that's backed by big phone companies.
Both WiMax and LTE offer speeds faster than the current 3G networks used by many wireless consumers to surf the Internet. Big cable companies are backing WiMax.
Clearwire's investors include Sprint Nextel Corp., Comcast Corp., Time Warner Cable Inc., Google Inc. and Intel Corp. Sprint and Comcast resell Clearwire's service in the few markets where it's already available.
Hodulik said the funding gives Clearwire a head start against LTE in offering so-called 4G mobile broadband service.
"The capital raise largely eliminates the funding risk while likely getting Clearwire running in additional markets sooner than expected," he said in a research note.
Hodulik raised his forecast for net new subscribers to 80,000 from 57,000 in the fourth quarter, and to 1.3 million from 1.1 million for next year.
But a more aggressive expansion will increase costs as well, so Hodulik raised his loss projections for 2009, 2010 and 2011.
The analyst doubled his share price target to $6 because of the longer-term advantage of signing up more subscribers.
Shares of Clearwire, based in Kirkland, Wash., rose 45 cents, or 8 percent to $6.11 in afternoon trading. The stock has traded between $2.64 and $9.42 in the past 52 weeks.