Sprint Slides; Bernstein Cuts to Underperform, Sees Increasing Pricing Pressure

Sprint (S) shares are coming under pressure this morning from Bernstein Research analyst Craig Moffett, who this morning cut his rating on the shares to Underperform from Market Perform, with a price target of $3, which is actually up from $2.50.

Recent price cuts by AT&T (T) and Verizon (VZ) in the post-paid market, and Metro PCS (PCS) in the pre-paid market, “tighten a vise that leases Sprint once again stuck in the middle,” he writes in a research note. He notes that the company’s cost structure “is poorly suited for the current round of wireless price wars,” with “a huge gap between Sprint’s per-subscriber monthly costs versus those of its peers.” He says the company’s steady-state per-subscriber monthly cost is close to $36, compared with $32 at T-Mobile, $29 at AT&T and $28 at Verizon, with Leap (LEAP) and Metro PCs lower still.

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