Stifel Downgrades Sprint

In a report published Friday, Stifel analyst Christopher King downgraded Sprint (NYSE: S) to Sell, with a $7.50 price target, as King remains skeptical of the company's near-term m&a prospects.

“Although we would view a merger between S and TMUS [T-Mobile U.S.] as a positive for the domestic wireless industry, we continue to view the likelihood of regulatory approval for such a deal as an uphill battle in Washington in the near-term despite DOJ/FCC concerns about Bell wireless dominance,” the report said.

According to the report, the analysts see DOJ's stated preference for maintaining an industry structure of four national wireless competitors, in an already concentrated market, as a potential objection to a S/TMUS merger. The report further noted the FCC's preference of maintaining four national carriers as potential bidders in the upcoming broadcast incentive auction, as another potential objection to the merger.

Stifel analysts continue to feel S is at a disadvantage to Verizon and AT&T.

“We continue to believe that S remains at an operational disadvantage to both Verizon and AT&T,” the report said. “Although the recent shutdown of its IDEN network, in combination with its larger Network Vision strategy should drive margins higher over the course of the next several years, we believe the company will continue to struggle to add a significant number of postpaid subscribers in the near-term.”

S closed Thursday at $33.37.