In a note to investors analyst firm Oppenheimer downgraded Sprint to "underperform" from "perform" due to recent competition and higher spectrum costs in the AWS-3 auction.
"We believe Sprint will be the most negatively impacted by competitive responses, and we think the stock is overvalued after factoring in $8B in expenditures for the broadcast spectrum auctions," analysts Timothy Horan and Jonathan Michaels wrote. "Sprint is now trading at 8.8x our 2016E EBITDA estimate, which is nearly a 2x premium to the carriers, and not justified given negative FCF. We believe additional share issuances are on the horizon and will cause further equity dilution."
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Shares of all four major U.S. wireless carriers started to decline after Verizon (VZ) warned on Monday that it would see lower profits in the fourth quarter due to promotions offered to compete against lower prices from Sprint, T-Mobile (TMUS) , and AT&T (T) .