Bank of America/Merrill Lynch (BAC) upgraded this morning Clearwire Corporation (CLWR) to Neutral from Underperform with a $7.50 price target. BofA said it believes Clearwire’s funding risks are already priced into the stock, and that Sprint Nextel Corp. (S) is not likely to walk away from the Kirkland, Washington – based company.
Barron’s : “We maintain our cautious longer term fundamental view based on funding needs, competitive threats, and our proportionate valuation framework,” BofA analyst Michael Funk wrote in a research note to investors. “Our upgrade here is based on the market’s understanding of the company’s funding challenges more closely aligning with our own, our view that the risk of Sprint abandoning CLWR is overstated, and our view that there is limited potential for incremental downside catalysts in the near term.”
Funk also said that his previous rating on the company and the $5.25 p/sh price target was based, in part, on the brokerage’s view that “the market was underestimating Cleawire’s cash burn and funding gap”. According to Funk, BofA “no longer believe this is the case.”
Shares of CLWR are lower on the session by 5.68%, currently trading at a new intraday low of $6.32. Next level of interest is $6.25.