It seems optimism around Sprint’s metrics for the holiday quarter is starting to wear thin.
Financial firm and sometime Sprint cheerleader Wells Fargo on Wednesday took an axe to its holiday quarter estimates for the carrier, citing seasonal churn and “more aggressive competitive offerings.”
Despite dubbing Sprint the “most interesting” stock on its wireless list and noting a “very” positive view of the carrier’s outlined path, Wells Fargo dropped its postpaid net addition prediction from 450,000 to 350,000 for the quarter. The firm also tweaked its churn estimate to 1.60 percent for the period, and lowered its revenue and earnings per share estimates for the 2016 fiscal year from $32.5 billion and -$0.20 to $32.3 billion and -$0.24.
According to Wells Fargo, Sprint was up against some fierce competition over the Christmas holiday. Specifically, the firm noted Verizon’s free iPhone offer in the week before Christmas, T-Mobile’s “Holidays on us” offer of $200 in credits for switchers and unlimited data plan pricing of $160 per month for four lines, and AT&T’s stepped up promotion of its DirecTV Now service and wireless and video bundles for switchers.
“The competitive environment in the last three weeks of December saw a dramatic pick up in promotions,” Wells Fargo Senior Analyst Jennifer Fritzsche wrote. “While S engaged in some promos, it has taken a more conservative stance for the most part, and was the only one of the 4 national wireless players not to offer a free iPhone over Thanksgiving weekend.”
The cuts from Wells Fargo come about a week after BTIG slashed its own forecasts for Sprint from 638,000 to just 372,000 and raised its churn prediction from 1.45 percent to 1.53 percent. BITG analyst Walter Piecyk said the changes were due to expectations of a strong quarter at T-Mobile as well as a bump for Verizon thanks to the Google’s Pixel smartphone.
But BTIG didn’t stop there. The firm also lowered its first calendar quarter estimate from 166,000 to 102,000, noting Sprint will be battling a “stiffer headwind” in coming quarters as it transitions customers off its half-off rate plans when the promotional pricing expires.