In our daily research summary of analyst upgrades and downgrades, we noted how Sprint Nextel Corporation (NYSE: S) was downgraded at Bernstein and the firm took the rating down to Underperform from Market Perform. While that rating is never good under any circumstances, it is the “B” word that is causing the most fear this morning. The report is not exactly predicting a bankruptcy filing for Sprint. It is saying that the odds are now a very legitimate risk to the shares now.
It has also been noted that the five-year credit default swaps already indicate a 50-50 chance that Sprint could file for bankruptcy. The firm does not believe that there is any analytical framework that would strengthen the case against the company avoiding bankruptcy.
Sprint Nextel shares are currently down by more than 4% at $2.77 against a 52-week trading range of $2.10 to $6.45. After 90 minutes of trading we have already seen over 30 million shares trade hands against an average volume of nearly 44 million shares.
JON C. OGG