Jefferies Starts MetroPCS (PCS) at Buy

Jefferies initiates coverage on MetroPCS (NYSE: PCS) with a Buy. PT $12.00.

"We are positive on MetroPCS, as its balance sheet could lead to a strategic
opportunity related to AT&T’s attempt to purchase T-Mobile," the firm states.

The key differentiator of MetroPCS is its balance sheet, currently leveraged at roughly 2.0x EBITDA and falling, the firm notes. They believe several opportunities could present themselves to PCS in 2012 to create shareholder value through a strategic transaction.

While growth in the pre-paid category will remain strong, the competitive landscape will likely get more challenging in 2012 as large carriers pay more attention.

APRU is benefiting from the proliferation of smartphones in the customer base, Jefferies notes. At Q3, PCS reported smartphone penetration of 30%. The company estimates that the NPV of a smart device customer is 2x a feature
phone customer.

For an analyst ratings summary and ratings history on MetroPCS click here. For more ratings news on MetroPCS click here.

Shares of MetroPCS closed at $8.64 yesterday.

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