Kaufman Brothers analyst Ben Abramovitz started coverage on Sprint (NYSE:S) with a "Buy" rating, citing average revenue per user and growing smartphone share.
On ARPU Abramovitz noted, “It is no surprise that given faster throughput, coupled with mobility, data consumption will tend to rise,” he said, which could lead to, “a new generation in wireless revenue potential with fewer competitors in the domestic market and a decline in the cost of network equipment. Wireless data ARPU is up nearly $2 in the past year alone, ending the year at close to an average of $18 in the fourth quarter and with pricing rising in 2011, we continue to see further improvement to data revenues on the horizon.”
Abramovitz said concerning smartphones that “At present, 50% of Sprint’s CDMA post-paid wireless customer base is using smartphones with 69% of all new customers in 4Q electing to purchase one. We continue to believe that penetration rates within the customer base will quickly move toward 70% potentially benefiting wireless revenue.”
Sprint closed Wednesday at $4.20, dropping $0.12, or 2.78 percent. Abramovitz has a price target of $6.25 on Sprint.
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