NEW YORK (AP) — A deal RadioShack Corp. announced last week with Verizon Wireless will attract more customers and boost earnings, according to Goldman Sachs.
THE SPARK: Analyst Matthew Fassler raised the electronics retailer to a “Buy” on Goldman’s conviction list, from “Neutral.” He set an $18 price target that suggests stock gains of 29 percent from Friday’s close.
THE BACKGROUND: RadioShack has struggled with competition from online retailers like Amazon.com and bigger electronics chains like Best Buy. RadioShack has shifted with some success its focus to smartphones and wireless plans, as well as selling cell phones and products at mobile phone kiosks.
Last week, the chain said it would sell Verizon products and services in U.S. stores in September, ending a deal with smaller carrier T-Mobile.
THE ANALYSIS: Switching to Verizon from T-Mobile will make RadioShack more appealing to shoppers because Verizon has more than triple the number of subscribers, said Fassler. That should boost RadioShack’s revenue and profitability in the next few years, he said.
SHARE ACTION: RadioShack shares were up 3 cents to $13.95 in late Monday morning trading. They had earlier risen as much as 5.6 percent, to $14.70. Gains evaporated after a weak report on U.S. manufacturing, which weighed on broader markets. The Standard & Poor’s 500 index fell 0.5 percent.