Sprint Retreats After Oppenheimer Cuts Rating To Underperform Amid Price War

NEW YORK (TheStreet) -- Shares of Sprint (S) are sinking after Oppenheimer downgraded the stock to Underperform from Perform. The firm thinks the company will be forced to issue additional shares.

WHAT'S NEW: Sprint recently cut the prices of its wireless plans by $10-$20 per month, Oppenheimer analyst Timothy Horan wrote in a note to investors today. Meanwhile, wireless spectrum costs are rising and other wireless carriers have issued negative announcements recently, including Verizon (VZ) on Monday night, as a price war is weighing on their profit margins, the analyst noted. Sprint will probably be the most negatively impacted by these trends, as it is losing $2B per year and will likely need to raise additional capital, Horan stated. The company will probably have to issue additional stock, further diluting shareholders, the analyst predicted.

WHAT'S NOTABLE: Horan cut his estimates for all the wireless carriers and trimmed his price target on AT&T (T) to $36 from $38 and on Verizon to $54 from $56. He kept Outperform ratings on both of those stocks. Separately today, the New York Post reported that RadioShack (RSH) is telling Verizon, AT&T, and Sprint that it will be forced to file Chapter 11 bankruptcy if it cannot rework its cellular deals.

PRICE ACTION: In early trading, Sprint retreated 5.5% to $4.32.

Reporting by Larry Ramer.

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