Sprint PCS ( PCS) is turning things around, a Wachovia Securities analyst said Thursday, and upgraded the company to outperform from market perform.

"PCS has moved beyond many of the concerns we held in the past," said analyst Jennifer Fritzsche. She said that while some issues continue to hang over the stock, "near term, we believe PCS shares present large-cap wireless investors with the best risk-reward scenario."

Fritzsche said she sees an improvement in churn rates related to subscriber retention initiatives. And the company's new management team will also help it target a higher-quality subscriber base.

Already, April and May have seen solid gross additions, and lower churn trends have characterized the second quarter, she said. The first-quarter churn rate was 3.1%, and the analyst believes Sprint's expectation of a total second-quarter churn rate of 2.7% is possible.

As such, Fritzsche raised her second-quarter 2003 net subscriber estimate to 385,000 from 245,000. "Lower churn means better growth."

Average revenue per user is also expected to increase, according to Fritzsche, due to recent price adjustments and a Sanyo 8100 built-in camera phone. Fritzsche raised her ARPU estimate for the second quarter to $59.50 from $59.25.

She increased her 2004 revenue estimate to $13 billion from $12.7 billion, but reduced her earnings before taxes and depreciation forecast to $3.78 billion from $3.98 billion. The valuation range on Sprint goes to $7 from $6.

Shares of Sprint PCS were up 4.3% in early afternoon trading to $5.08 on the New York Stock Exchange.

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