Clearwire’s stock bounces briefly on analysts’ confidence

Wireless broadband service provider Clearwire Corp.’s stock rose briefly today as analysts issued favorable reports of the company’s prospects, but later continued its downward trend.
Clearwire’s stock rose more than 6 percent after the favorable reports, from around $18.61 at the close of trading yesterday to $19.80 per share today. However, by midday today the stock had slid to around $18.06 per share.
The company’s stock has had a rocky start since Clearwire’s initial public offering in early March. The company’s stock sold initially for $27.25 per share and briefly increased in value, but has since trended downward, typically trading between $20 and $22 per share and recently slipping below the $20 mark. Clearwire gained $600 million from the IPO.
A round of analysts issued mainly bright outlooks on the company. Jeffries & Co. and Stifel Nicolaus gave Clearwire’s stock a thumbs-up with a “buy” rating, and Wachovia, Raymond James and J.P. Morgan rated Clearwire as an overweight/outperform stock. Bear Stearns gave the company a “peer perform” rating.
“We believe consumer demand for high-speed Internet access will grow considerably over the next several years, and Clearwire’s offering, which utilizes wireless cell sites instead of landlines or cables, is so compelling and easy to use that a significant percentage of subscribers will quickly adopt service once it is available in their territory,” said Raymond James analyst Ric Prentiss in a research note.
Clearwire had filed for an IPO early last year, but opted to forgo the offering after the company received a $900 million investment from Intel Corp. and Motorola Inc.
The company has said that its IPO monies likely will go toward its build-out and spectrum acquisition costs. Indeed, the pre-WiMAX wireless broadband provider recently agreed to spend $300 million to buy 2.5 GHz spectrum covering the southeastern United States that AT&T Inc. was forced to sell as part of the conditions for its acquisition of BellSouth Corp.
Clearwire said in year-end filings that it offered pre-WiMAX services in 34 markets and covered an estimated 8.6 million people, with a wireless broadband customer base of more than 206,000 subscribers. The company sells its services as an alternative to cable and DSL connections, and is also testing a mobile WiMAX service that would compete with the 3G offerings from the nation’s wireless carriers.