Friday, Credit Suisse initiated coverage of Leap Wireless International Inc. (LEAP) stock with a Neutral rating and a price target of $15.
Although analyst Chaplin believes long-term fundamentals would be challenging, he initiated the stock at Neutral because he believes Leap is a likely takeout candidate. The analyst's price target of $15 is based on a discounted cash flow, or DCF, and relies heavily on the value of non-operating assets.
The analyst expects increasing competition across the prepaid market to result in declining ARPU and rising churn and CPGA for Leap. This drives substantial margin pressure, resulting in declining EBITDA and FCF towards the end of the analyst's forecast period.
However, the analyst expects margin expansion in 2010 as the margin drag from new market launches eases. In addition, the analyst believes the company is preparing for M&A and could be acquired long before competitive pressures take hold.
The analyst expects a number of pricing announcements from competing carriers over the course of the next few months, which he believes would result in long-term expectations for ARPU to come down. In addition, the analyst expects churn and CPGA to rise for all carriers over the next few quarters, which should also lead to lower expectations for long-term margins.
Currently, LEAP is down $0.78 or 5.22% and trading at $14.17.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.