Sprint (S) Stock Rising as SoftBank Ups Stake

With Sprint Nextel becoming its direct wholly owned subsidiary in the Merger, Sprint Corporation was merged into Sprint Nextel, New Sprint became the parent company of Sprint Nextel, and its name was switched by Sprint Nextel to Sprint Communications, Inc. The company said it intends to keep its stake in Sprint below an 85 percent threshold that would trigger a tender offer for the remaining shares, a condition of SoftBank’s $21.6 billion deal to acquire Sprint in 2013.

Sprint Corp (NYSE:S) has been showing high volatility over the last 30 days, which escalated after it released its first-quarter fiscal year 2015 earnings. Reports say that these shares correspond to 0.58% of outstanding shares of Sprint common stock.

Shares of Sprint rose 16 cents, or 4.1 percent, to $4.04 during premarket trading.

SoftBank, which Son founded and heads as chief executive, bought an additional 22.9 million shares in the open market on Monday, Tuesday and Wednesday.

The shares are still trading above the US$68 paid in September’s initial public offering, which raised a record US$25 billion.

S reported last quarter earnings on August 04. S stock price has underperformed the S&P 500 by 8%. The company now has an average rating of “Hold” and an average price target of $4.65. The consensus target price stands at $4.16.

Jennifer Fritzsche, an analyst at Wells Fargo Securities, said the stock purchase, Son’s renewed confidence and stock incentives given to Claure were good signs for other Sprint stockholders. The Cellular Telecompany announced earnings per share of $-0.01 against a consensus Street estimate of $-0.08, beating the average estimate by $0.07. On the date of report, the stock closed at $3.67. Based on these values, the days-to-cover short interest ratio is calculated at 4.71 days, which means it will take short sellers more than four days to cover their short position. The stock price will improve if the company reports profits instead of losses.