The Zacks Analyst Blog Highlights: Leap Wireless International, Metro PCS Communications, Sprint Nextel, America Movil SAB and Discover Financial Services

CHICAGO, April 4, 2011 /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), Metro PCS Communications Inc. (NYSE: PCS), Sprint Nextel Corp. (NYSE: S), America Movil SAB (NYSE: AMX) and Discover Financial Services (NYSE: DFS).

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Here are highlights from Friday's Analyst Blog:

Leap Expends Into New Markets

Leap Wireless International Inc. (Nasdaq: LEAP), a small-sized prepaid wireless services provider in the U.S. operating under the brand name "Cricket", unveiled its popular Muve Music service plan in new markets across the country.

The popular music service will be available in more than 15 states across the country.

Cricket customers can access a combined package of voice, data and text along with unlimited music download on the nationwide 3G network of Leap Wireless by paying just $55. Leap is the first wireless service provider in the U.S. to launch this innovative service.

This popular service plan was launched in the beginning of 2011 across few states in the U.S. But looking at the growing popularity of the service plan among music lovers, the company is expanding its service to many more states. Presently, the company is serving 26 (including the newly-added states) states across the country.

Leap Wireless has already tied up with popular music companies like Universal Music Group, Warner Music Group, Sony Music Entertainment and EMI Music in order to offer a variety of music to its subscribers.

We believe this product innovation is a desperate attempt by management to revive the company's financial position. As the prepaid wireless market is getting more competitive, Leap is suffering as its larger peers such as Metro PCS Communications Inc. (NYSE: PCS), Boost Mobile, a subsidiary of Sprint Nextel Corp. (NYSE: S), and Tracfone, a subsidiary of America Movil SAB (NYSE: AMX) continue to attract subscribers with their competitive service plans, greater network coverage and better product offerings.

Leap remains one of the low cost wireless service providers in the U.S, which enables it to roll out a range of cheap service plans starting from as low as $35 per month. The company has strategic plans to expand coverage in urban and suburban markets and avoid less populated areas to keep its infrastructural cost low. After establishing its network in a new market, the company will promote its services mostly through less expensive media.

We maintain our long-term Neutral recommendation on Leap Wireless International Inc. Currently, Leap Wireless International Inc. has a Zacks Rank # 3, implying a short-term Hold rating on the stock.

Earnings Scorecard: Discover

Discover Financial Services (NYSE: DFS) reported its first quarter earnings for fiscal year 2011 on March 22, beating the Zacks Consensus Estimate substantially by 33 cents per share, led by strong net interest income growth and lower loan loss provisions, though partially offset by higher-than-expected interest expenses.

Nonetheless, the investors' reactions to the better-than-expected results were quite optimistic on Wall Street. This gets reflected in the upward price movement witnessed since the earnings release. The confidence could be justified not only by the fundamental improvement in the credit and profitability metrics but also by the recent acquisition of the Student Loan Corp. (SLC).

Below we will cover the results of the recent earnings announcement, subsequent analyst estimate revisions and Zacks ratings for the short-term and long-term outlook for the stock.

Earnings Report Review

It's always encouraging to outperform estimates, particularly when the difference is substantial enough to inject optimism into the future. A quick look at the top line reveals extensive growth across segments, including direct banking and payment service volumes, whose pre-tax operating income surged year over year.

While Discover credit card volumes grew by 7% year over year on higher consumer spending and merchant acceptance. Further, the credit quality improved on the reduction in the loan loss reserve rate, and as the credit card charge-off rate declined along with the decline in the credit card loan delinquency rate in the first quarter.

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