Bank of America Merrill Lynch Previews Earnings From Sprint Nextel Corp.

Bank of America Merrill Lynch is out with a research report on Sprint Nextel Corp. S as it previews earnings from the company. It has a Neutral rating and a $5.50 price target on shares. In a note to clients, Bank of America Merrill Lynch writes, "We project service margin of 19.1%, flat vs. 1Q11 and 2Q10 and in-line with consensus. Better margin in 1Q despite softer subscriber performance drove a positive stock price reaction. With a new CFO likely just becoming engaged on the cost front and more aggressive promotions in the market in 2Q to counter T-Mobile's price aggression, we believe there is limited scope for incremental upside surprise in 2Q on the margin front. This said, RadioShack announced Sprint saw lower upgrades in its stores which could have generated a short-term margin tailwind." Shares of S gained 3 cents yesterday to close at $5.18.