Credit Suisse‘s Jonathan Chaplin today raised his Ebitda estimates for both Sprint-Nextel (S) and for Verizon Communications (VZ) based on improved trends in the wireless business.
Chaplin, who has an Outperform rating on shares of Sprint, and a $4 price target, writes that the company is seeing higher average revenue per subscriber (ARPU) growth of 7% this quarter versus 5.6% projected previously, helped by a recent price increase of $10.
He raised his revenue estimate to $8.7 billion from $8.6 billion, and his Ebitda estimate to $1.06 billion from $847 million; Street consensus is $8.72 billion and $908.9 million.
Part of that is lower-than-expected costs from the company’s “Network Vision” renovation of its network. Part of that is just timing of the spending, and the other part is because “the company is recapturing more iDEN subs than we had expected.”
As for Verizon, its ARPU growth may have been 3% last quarter, up from a prior expectation of 2.6%, writes Chaplin. that caused him to boost his Ebtida estimates to $9.25 billion from $9.16 billion, and his EPS estimate rises to 58 cents from 56 cents, despite weaker wireline performance. His revenue estimate, however, is slightly lower, at $28.18 billion versus $28.2 billion, given a slower recovery among enterprise customers.
The Street is modeling $28.19 billion in revenue, $9.22 billion in Ebitda, and 57 cents per share.
Verizon shares this afternoon are 8 cents at $38.44, while Sprint shares are up 2 cents, or 0.6%, at $2.88.
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