Morgan Stanley Maintains on Clearwire, But Bullish On Its Financing

Morgan Stanley (NYSE: MS) reiterated its underweight rating on Clearwire (NASDAQ: CLWR). Although rival cell phone networks are rapidly developing their networks, CLWR could benefit from its recent round of equity and debt financing, the bank said.

Despite competitive advantages in its technology, CLWR is still relatively weak in terms of coverage. Additionally, wrote the bank, its major rivals – AT&T (NYSE: T), T-Mobile and Verizon (NYSE: VZ) – are currently upgrading their respective networks in order to serve rising demand for data.

Morgan Stanley believes that Clearwire’s recent securing of $4.4 billion in additional funding will help the firm turn EBITDA positive within the next five years, and free cash flow positive in 2016. The bank updated its forecasting model for the company in order to reflect the new financing.

Shares of Clearwire were sideways at $5.95 in late afternoon trading today.