Sprint shares rise after analyst upgrade

Sprint Nextel Corp., the third- largest U.S. wireless carrier, rose to the highest level since September after Credit Suisse AG boosted its price target for the stock, citing its network upgrade and cost management.

Sprint advanced about 3 percent, or 17 cents, to $3.62 Tuesday afternoon after earlier touching $3.64, the highest price since Sept. 1. The shares have risen 48 percent this year through Monday.

The Overland Park company is upgrading its system to long-term evolution, or LTE, and said in a statement yesterday that it now has service in six cities and partial service in 15 additional areas.

“The company has built in some cushion in different areas on the cost side,” Jonathan Chaplin, a New York-based analyst for Credit Suisse, said in a telephone interview. The drag on costs from the Network Vision upgrades “will be less than everyone thought it would be,” Chaplin said.

Looking ahead to 2014, Chaplin estimates that Sprint will post earnings before interest, taxes, depreciation and amortization, or Ebitda, of $8.1 billion. He boosted his target price for the stock to $6 from $4.

Helping to reduce those costs, said Chaplin, is the falling prices of phones as Sprint moves away from the more expensive WiMax models toward LTE devices. Chaplin also said Sprint will see an increase in sales of iPhone 4S phones, which he expects will be priced lower when the iPhone 5 arrives later this year.

This will help “offset the higher subsidy costs” Sprint is facing with the new iPhone,’’ he said.