We upgrade our recommendation for RadioShack (RSH) to Outperform based on our assessment that the company is likely to improve its earnings in the future reporting quarters as a result of significant boom in the wireless industry.
The company is generating massive revenue growth from stronger sales of postpaid wireless business and prepaid wireless handsets and airtime. Emphasis on next-generation smartphones like iPhone 4 also helps RadioShack improving its bottom-line. Its Wireless product category is expected to perform well in future due to growing demand for feature rich smartphones together with management decision to extensively rolling out is Kiosks in Target stores.
Furthermore, management has recently raised its share buy-back program to $500 million from previously declared $290 million. Out of this, $300 million of share repurchase will be done on accelerated basis.