UPDATE 1-Virgin Mobile USA falls 54 pct on weak outlook

(Adds analyst quote, background details, share price)

NEW YORK, March 13 (Reuters) - Shares of Virgin Mobile USA (VM.N) fell as much as 54 percent on Thursday after it issued disappointing forecasts, exacerbating fears it was being battered by intensifying competition and economic weakness.

Shares of Virgin, which was priced at $15 in its initial public offering last October, went as low as $1.90, or 87 percent below the IPO price after it warned late on Wednesday that revenue would not grow this year, and it issued disappointing customer growth targets.

Several analysts cut their ratings on the stock after the news and the shares closed down 41 percent or $1.74 at $2.46 on New York Stock Exchange on Thursday.

"With 2 quarters in a row of disappointing guidance we believe that the softening economy and increased competition have eliminated management's ability to forecast its business," said Bear Stearns analyst Phil Cusick in a client note.

At such a low share price, Cusick, who downgraded the stock to "underperform" from "peer perform", said there was some speculation that Virgin Mobile USA could be bought, but he said that this would be unlikely.

"We see no reason any competitor would buy Virgin Mobile's equity," Cusick said. Other analysts echoed this sentiment.

Shares in No. 3 U.S. mobile service Sprint Nextel (S.N), which has a roughly 11 percent stake in Virgin Mobile USA and rents it network space, fell 23 cents or 3.7 percent to $5.99 after the news. Sprint is already struggling with steep customer losses at its own wireless service.

Virgin Mobile USA, which is roughly 35 percent owned by Richard Branson's Virgin Group [VA.UL], offers prepaid mobile services to young people who pay for calls in advance rather than via monthly bills.

It warned that current quarter subscriber growth would fall to a range of 5,000 to 20,000, down from net additions of 210,000 customers for the fourth quarter.

Stanford Group analyst Michael Nelson, who had expected Virgin to add 130,000 customers in the first quarter, in a phone interview described the outlook as "dismal."

"We believe Virgin Mobile is losing share of the prepaid market, owing to intense competition from national and regional carriers," said Nelson, in a note to clients.

Large rivals such as Verizon Wireless, a venture of Verizon Communications (VZ.N) and Vodafone Group Plc (VOD.L), have recently been promoting prepaid services more aggressively as growth in monthly bill paying customers is declining.

"Additionally, we believe the slowing macroeconomic environment is leading to lower minute usage for the company's pay-per-minute plans," said Nelson, who first recommended that investors sell the stock days after the IPO. He kept his sell rating on the stock on Thursday.

Virgin's warning that revenue would not grow this year compared with analyst estimates for 20 percent revenue growth.

Its 2008 forecast for adjusted earnings before interest, tax, depreciation and amortization (EBITDA) of $105 million to $130 million compared with average analyst estimates for EBITDA of $142.8 million.