Weekly wireless ratings wrap-up

The following list includes ratings changes and financial information for wireless companies announced this week by investment-banking and financial-services firms.

Carriers

• R.W. Baird lowered its estimates on Sprint Nextel, noting the company missed the firm’s expectations on postpaid customer growth. For 2006, Baird expects the company to report EPS of $1.51 rather than $1.58, and for 2007 it forecasts EPS of $1.65 rather than $1.71. RBC Capital Markets lowered its price target on the company from $33 to $28 on lower wireless cash flows for 2006 and beyond. Further, RBC lowered its 2006 EPS estimate on the company from 70 cents to 58 cents, citing mixed 4Q results. Prudential Equity Group slightly increased its EPS estimate on Sprint Nextel for 2006 from $1.60 to $1.63. The firm noted Sprint Nextel’s revenues were light for the fourth-quarter but that EBITDA was ahead of expectations.

• RBC Capital Markets adjusted its 2006 estimates on Nextel Partners Inc. to account for the flow-through impact of fourth-quarter 2005 results. The company expects EPS of $1.06 rather than $1.02. Nextel Partners’ 4Q report fell short of the firm’s expectations.

• Merrill Lynch raised its rating on Qwest Communications International Inc. based on free cash flow generation, the future cash flow growth outlook and the potential return to shareholders. Qwest reported better-than-expected fourth-quarter results.

• Merrill Lynch raised its price target on Verizon from $35 to $38 on higher wireless and wireline target multiples. Merrill Lynch rates Verizon at buy.

• Standard & Poor’s Ratings Services assigned its B+ bank loan rating and ‘3’ recovery rating to Alaska Communications Systems Holdings Inc.‘s proposed $57 million incremental term loan. S&P also affirmed its B+ corporate credit rating and stable outlook, its B+ debt rating and 3 recovery rating on the company’s existing $375 million senior secured bank facility and its B+ corporate credit rating and stable outlook on Alaska Communications Systems Group Inc.

International

• RBC Capital Markets revised its 2006 EPS estimates on Telus Corp. from $2.58 to $2.50 after the company reported fourth-quarter results. RBC pointed to higher wireless customer acquisition and retention costs. Merrill Lynch reduced its 2006 EPS estimates on Telus following its 4Q report but maintained its buy rating and price target on the company.

Other

• Avondale Partners downgraded Novatel Wireless Inc. from market outperform to market perform after the company reported lower-than-expected sales and earnings results and offered guidance below expectations. In addition, Avondale lowered its price objective on the company from $14 to $9 and reduced its 2006 estimates to earnings of 5 cents rather than 40 cents. The firm noted it believes Novatel can be successful as it transitions its strategic focus to embedded modems and fixed-wireless convergence instead of PC data cards, but it downgraded the company on risks associated with the transition. Piper Jaffray lowered its price target on the company from $12 to $10 and reduced its 2006 estimates on the company from earnings of 42 cents per share on revenues of $217.6 million to EPS of 25 cents on revenues of $203.3 million, and its 2007 estimates from earnings of 63 cents per share on revenues of $287.9 million to earnings of 50 cents on revenues of $268.6 million.

• Morgan Stanley raised its price target on SBA Communications Corp. from $22 to $26 after the company reported solid fourth-quarter results. Morgan Stanley rates SBA at overweight.

• Prudential Equity lowered 2006 EPS estimates on RadioShack Corp. after the company announced restructuring plans and its chief executive resigned. New estimates are $1.37 rather than $1.75. RBC Capital Markets also lowered its estimates on RadioShack after the retailer turned in ‘lackluster’ results. RBC lowered its 2006 EPS estimate from $1.85 to $1.60 and its 2007 estimate from $2.10 to $1.80. RBC noted RadioShack’s core wireless category struggled during the quarter.

• Avondale Partners downgraded Wireless Facilities Inc. from market perform to market underperform due to a difficult operating environment, concerns about cash flow and a lack of execution at the company. Wireless Facilities announced plans to sell its Mexican operations last week. Avondale lowered its price target on the company from $5 to $3 and lowered its 2006 EPS estimate from 26 cents to 16 cents on the news.

• RBC Capital Markets raised its estimates and price target on Nvidia Corp. after the company reported strong fourth-quarter financial results and offered strong first-quarter guidance. RBC’s new price target on the company is $54, up from $46. For 2006, RBC expects the company to report EPS of $1.72 rather than $1.69; for 2007 it expects EPS of $2.37, rather than $1.95; and for 2008 it expects EPS of $2.59, rather than $2.18.

• Goldman Sachs lowered its estimates on Netgear Inc. after the company reported fourth-quarter revenues that fell below estimates. Goldman Sachs lowered each of its quarterly revenue and EPS forecasts for this year and reduced its full-year 2006 estimates on the company to earnings per share of $1.14 on revenue of $519.5 million, rather than EPS of $1.21 on revenues of $550.8 million.