Are the Bears Closing in on Telecom Stocks?

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Part 4
Are the Bears Closing in on Telecom Stocks? PART 4 OF 6

How the Stock Market Fall Has Impacted Sprint Stock

Sprint stock down over 1.3%

Sprint (S) stock was trading at $5.30 by the end of February 9, 2018, which represents a decline of ~1.3% from its closing price on January 26. Sprint is now trading ~7.9% above its 52-week low of $4.91 and ~43.9% below its 52-week high of $9.44.

This telecom company’s stock price has fallen ~1.1% in the trailing-five-day period as of February 9. Below, we’ll discuss what this means.

How the Stock Market Fall Has Impacted Sprint Stock

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Sprint’s recent price fall has meant that it’s now trading below its moving averages. The stock is trading ~15.2% below its 100-day moving average of $6.25, ~4.8% below its 50-day moving average of $5.57, and ~0.9% below its 20-day moving average of $5.35.

As of February 9, 2018, Sprint has an MACD (moving average convergence divergence) of -0.12. By comparison, AT&T’s MACD is -0.06, while Verizon’s is 0.08, and T-Mobile’s is -0.16. Remember, a negative MACD figure suggests that a stock is in downward trading trend, while a positive MACD number suggests an upward trading trend.

Sprint trading at a premium of 6% to median target estimates

Sprint released its fiscal 3Q17 (quarter ending December 2017) financial results on February 2, 2018. Sprint added approximately 256,000 net postpaid customers in fiscal 3Q17, including 184,000 postpaid phone customer net additions during the same quarter. The company also added 63,000 prepaid customers in fiscal 3Q17.

By comparison, in calendar 4Q17, AT&T (T) and T-Mobile (TMUS) gained 140,000 and 149,000 prepaid net customers, respectively, while Verizon Communications (VZ) lost 184,000 prepaid net customers during the same period.

Of the 29 analysts tracking Sprint, only one has recommended a “buy,” while 18 have recommended a “hold” for the stock. Ten analysts have recommended a “sell” for the stock as of February 9.

The average 12-month target price for Sprint is now $5.38, with a median target of $5. The stock is thus trading at a premium of ~5.7% to median estimates, despite the recent fall in its share price.

In the next part of this series, we’ll check in with Frontier Communications’ (FTR) reaction to what’s happening now on Wall Street.


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