Barclays began its coverage of Leap Wireless, parent company of Cricket Wireless, by slapping an underweight tag on the prepaid carrier and putting the price target (PT) at $4. Leap’s stock today is down more than two percent.
The less-than-glowing recommendation from Barclays follows a number of downgrades for Leap, including JP Morgan Chase downgrading from neutral to underweight and sticking with its $5 PT. Those changes arrived in sync with Leap’s flat-to-disappointing first quarter numbers on April 30.
The company reported $790 million in revenue for the quarter, down 4.3 percent annually, on a -$1.43 EPS that was up 11.7 percent from the -$1.28 EPS posted in the same quarter 2012. And although ARPU was up 2.7 percent annually for the quarter, Leap reported more than 93,000 customer losses.
But Leap did report promising news on sales of iPhones, which had been a sticking point for the provider since signing a distribution deal with Apple in 2012. Earlier in the year, Cricket Wireless reported selling only half the number of iPhones it had promised in its contract with Apple, saddling the company as much as $100 million in unsold iPhones.
Cricket will also begin selling the Samsung Galaxy S4 soon and, considering the reported 10 million units Samsung has already shipped in the first month, adding that blockbuster to Cricket’s device portfolio could bode well.