Leap Wireless International Inc.  (LEAP) Trade Now »     Rate LEAP  -  Discuss LEAP  -  Add to Watch List        

Leap Wireless (LEAP) shares are trading sharply higher this morning after Citigroup analyst Michael Rollins upped his rating on the stock to Buy from Hold, lifting his price target on the stock to $26, from $20. The new target would be nearly a double from last week’s close at $13.22.

Rollins notes that both LEAP and MetroPCS (PCS) shares have been pummeled on a sharp negative swing in sentiment, as growth prospects have been hurt by both the soft economy and new competition. Nonetheless, he thinks LEAP shares will benefit over the next six moths from four factors:

Leap Wireless (LEAP) and MetroPCS (PCS) shares are both trading sharply higher today, apparently on ebbing fears about a new T-Mobile pricing and marketing plan known as Project Dark.

Goldman Sachs analyst Jason Armstrong this morning cut his ratings on both Leap Wireless (LEAP) and MetroPCS (PCS) to Neutral from Buy. He cut his price target on LEAP to $16, from $26; for PCS he goes to $7, from $14.

Armstrong writes that catalysts for the stocks remain negative, as competition in the pre-paid cellular market continues to intensify. He says upcoming quarterly reports are likely to disappoint.

The already intensively competitive wireless sector today finds itself with a tough new player: Wal-Mart (WMT). The retailing giant has teamed up with American Movil (AMX) to sell low-cost service under the Straight Talk brand. The company is offering unlimited voice and text minutes for $45 a month, or 1,000 minutes and 1,000 text messages for $30 a month.

WMT is rolling out the plans nationwide after previously testing service via 234 stores, according to Reuters.

The competition in the prepaid wireless market just moved up a notch.

AT&T (T) this morning announced a new $60 a month pre-paid service under its GoPhone brand with unlimited U.S. voice calls and unlimited text messaging to the U.S., Mexico, Canada and more than 100 other countries. The plan includes unlimited IM picture and video messages. The service does not require a contract, and offers a range of full keyboard devices.