Is it time to buy Sprint Nextel Corp (S)?

Currently, Sprint's (S) book value per share is close to $18. The stock is trading just under that price. Sprint faces major challenges in the wireless space as it continues to integrate Nextel customers. Sprint has been hurt by signing up sub-prime credit customers and has a significant amount of "“bad debt."”

Catalysts

Sprint might look attractive to a cable or satellite company for integrating a "“quadruple play"” (wireless, video, internet, and land line). Sprint derives 93% of it revenue from wireless and 7% from long distance.

The popular Motorola RAZR and KRZR will be available in Q4. Sprint has lagged the other wireless carriers in phone selection.

Merger synergies with Nextel will start to impact the bottom line in 2007. Sprint will save with a uniform billing, IT, and customer service system. (Source: SG Cowen)

Analysts

Wachovia

* $16-$18 value per share
* Stock deserves discount with integration problems and sub-prime credit customers
* Fundamentals continue to get worse
* Limited downside

SG Cowen

* 6X 2008E EBITDA = $29.26 per share
* Catalysts mentioned above

Sources:
Wachovia Equity Research 9/26/06
SG Cowen Equity Research 9/26/06

Note: As of 10/11/06 I have no position in Sprint Nextel (S)