The Zacks Analyst Blog Highlights: Leap Wireless International, T-Mobile U.S., AT&T, Sprint and Generac Holdings

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Jul 29, 2013, 09:30 ET

CHICAGO, July 29, 2013 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Leap Wireless International Inc. (Nasdaq:LEAP-Free Report), T-Mobile U.S. Inc. (NYSE:TMUS-Free Report), AT&T Inc. (NYSE:T-Free Report), Sprint Corporation (NYSE:S-Free Report) and Generac Holdings Inc. (NYSE:GNRC-Free Report).

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Here are highlights from Friday's Analyst Blog:

MetroPCS Jumps into Leap's Territory

To compete with arch rival Leap Wireless International Inc. (Nasdaq:LEAP-Free Report), MetroPCS, the prepaid arm of T-Mobile U.S. Inc. (NYSE:TMUS-Free Report), has doubled its operational territory. This puts MetroPCS on par with Leap in many new markets.

MetroPCS' coverage has expanded to a potential customer base of 150 million from 100 million and includes 13 metropolitan areas. MetroPCS will also operate separate stores in markets where T-Mobile services are available. Additionally, it plans to add 1,000 prepaid stores in the new markets by the end of 2013.

Notably, in May 2013, T-Mobile USA, a subsidiary of Deutsche Telekom, acquired MetroPCS Communications Inc. Per the deal, MetroPCS shareholders will get cash consideration of $1.5 billion along with a 26% stake in the combined entity, as compared with Deutsche Telekom's 76%. Post the deal, MetroPCS added 9 million customers to the existing 34 million of T-Mobile USA.

Going forward, T-Mobile is reportedly planning to close down MetroPCS' network over a period of two years and move the latter's customers into T-Mobile's network. T-Mobile U.S. plans to utilize MetroPCS' airwaves to build and expand its own network.

Meanwhile, AT&T Inc. (NYSE:T-Free Report) has proposed to take over the largest prepaid wireless operator in the U.S., Leap Wireless, for $1.2 billion. Including Leap's net debt of $2.8 billion, the value of the deal is around $4 billion. Leap offers 3G CDMA and 4G LTE networks, which cover almost 98% of the U.S. population.

T-Mobile U.S., the fourth largest carrier in the U.S., competes with AT&T Inc., Verizon Wireless and Sprint Corporation (NYSE:S-Free Report) for postpaid customers, who pay their bills regularly MetroPCS' superior position in the no-contract wireless market has encouraged the company to venture into the prepaid sector.

At the end of first-quarter 2013, almost 32% of the smartphones sold were prepaid as compared with 21% in the year-ago quarter. The expansion of its prepaid operations is a timely one for MetroPCS given the growing nature of the business. As it will take 6-9 months for AT&T to complete the Leap deal, we believe that penetrating into its rival's market will be beneficial for MetroPCS, given the nation-wide footprint of T-Mobile U.S.

TMUS currently carries a Zacks Rank #3 (Hold).

Generac to Acquire Tower Light

Leading electric power product supplier, Generac Holdings Inc. (NYSE:GNRC-Free Report), recently announced the acquisition of Tower Light Srl and its subsidiaries from the European private equity fund, Ambienta I for an undisclosed amount. The deal is expected to close in third-quarter 2013 and is subject to regulatory approvals.

Based in Italy, Tower Light is a leader in the development and supply of mobile light towers. The company's market spans across 50 locations ranging from Europe and the Middle East to Africa and Australasia. Mobile light towers are generally used in events, road works and construction sites as they are easy and convenient to use.

Along with these, Tower Light also includes static lighting towers, special lighting towers and security towers in its products range. The company generated revenues of €37 million ($47.6 million) in 2012.

Generac offers a range of power products for the residential, commercial and industrial markets. The company manufactures portable power products, power washers, power inverters, mobile power generators for the end users. With the acquisition, Generac will become a leader in the light towers business with an expanded geography to explore.

Generac has been performing well over the past few quarters. The company reported adjusted earnings per share of $1.21, in the first quarter of 2013, spurting 26% year over year. Demand for home standby and portable generators have been increasing, helping the company boost its earnings. The acquisition is expected to generate significant revenues for the company.

Generac has been making efforts to expand inorganically. Last year, it acquired the power generation equipment manufacturer, Ottomotores UK Limited, including the operations of Ottomotores Mexico and Ottomotores Brazil for $46.5 million. The company carried out the acquisition to expand in the international market.

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