Leap Wireless (LEAP) shares are trading lower this morning following last night’s March quarter earnings report, and a downgrade of the shares to Hold from Buy by Citigroup analyst Michael Rollins. He also removed the stock from the firm’s Top Picks Live list.
Rollins notes that the stock had rallied 27% since the end of January, and adds that the stock now faces “the absence of near-term positive catalysts for subscriber growth to outperform the historical seasonal headwinds for the next 3-6 months.” Rollins instead is steering investors to Buy-rated Sprint (S).
Rollins writes that the Q1 results were solid, but that the company said that nothing that suggests nothing near-term that will overcome a seasonally weaker period. He adds that “the economic backdrop and the competitive environment are not stabilizing fast enough to provide Leap with the operating momentum necessary to exceed consensus revenue over the next 6 months.”
LEAP is off 32 cents, or 1.9%, to $16.46.
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