Sprint shares fall after bearish analyst report
NEW YORK (Reuters) - Shares of Sprint Nextel (S.N) tumbled more than 17 percent on Tuesday after an analyst cut his earnings estimates, saying the struggling wireless service's turnaround may take longer than expected.
The company's shares were down 72 cents at $6 on the New York Stock Exchange, after falling earlier to a session low of $5.55, its lowest level in about 20 years.
Stanford Group analyst Michael Nelson in a client's note also said that Sprint's debt-to-earnings before interest, tax, depreciation and amortization (EBITDA) ratio -- now at 2.5 -- would need to remain below 3.5 to satisfy its debt covenant requirements.
"That, coupled with the imminent investor event tomorrow... could have driven its share price lower," said Rebecca Engmann Darst, equity options analyst at Interactive Brokers Group.
Sprint's Chief Network Officer Kathy Walker is scheduled to speak at a Bear Stearns investor conference on Wednesday morning.
Nelson kept his "hold" rating on the stock but cut his full-year 2008 EBITDA estimate for Sprint to $8.33 billion from $8.78 billion and reduced his full-year 2009 EBITDA expectation to $8.25 billion from $9.13 billion.
A Sprint spokeswoman declined to comment on the stock activity.
Several analysts suggested there may be more to the stock's decline, but were not clear on what sparked the drop.
"People may be concerned about liquidity," said Stifel Nicolaus analyst Chris King.
King noted that while it is possible that Sprint in the future will fail to meet the requirements of its debt covenants, it was not likely.
Sprint posted a $29.45 billion quarterly loss last month after a massive goodwill write-off amid steep customer losses. The company had also forecast deepening customer losses for the current quarter and said the losses would be unlikely to improve in the second quarter.
(Reporting by Sinead Carew, additional reporting by Doris Frankel in Chicago; editing by Phil Berlowitz)
