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Leap Wireless International (NASDAQ: LEAP): A Bit of Analysis

Leap Wireless International, Inc. (NASDAQ: LEAP) is a wireless communications company that offers innovative, high-value services through our Cricket brand. Leap’s goal is to provide the best wireless experience at the best value, with all the advantages of pre-paid. Since Cricket’s inception, our “no contracts, no limits” approach has prompted a dramatic change in the wireless industry.

LEAP’s stock price has rolled up and down dramatically as different analysts offer different perspectives on how valuable they believe are the company’s spectrum holdings.

Stock fell 10 percent in 3 days last December and thereafter an analyst at Guggenheim Securities suggested that there’s a high chance MetroPCS (NYSE: PCS) or T-Mobile USA would bid for Leap after the two companies completed their merger. As a result, stock climbed back 12 percent in 2 days. The analyst at Guggenheim raised his price target from $7 to $8.50, estimating that a buyout could run as high as $10 per share.  Since the end of last week LEAP shares felt 14% following Jefferies’ analyst note. The analyst there cut his rating on the stock from “Hold” to “Underperform,” and lowered his price target from $6 to $5, for the exact opposite reason the analyst from Guggenheim made his call.

Nearly every analyst who covers the stock has a “Hold” rating, and the average price target is $6.70. The company is expected to report a fourth-quarter loss of $1.61 per share on February 15.

LEAP reported today that it has issued inducement awards to two new non-executive employees.

The awards were made on January 14, 2013 under Leap’s 2009 Employment Inducement Equity Incentive Plan, which provides for the granting of equity awards to new employees of Cricket Communications, Inc. as an inducement to join the company.

The inducement awards consist of options to purchase up to 16,125 shares of Leap common stock and deferred stock units for 9,275 shares of Leap common stock. The options have a ten year term and an exercise price equal to the fair market value of Leap common stock on the date of grant.

The awards vest in four years, with the options vesting in equal 25 percent annual increments and the deferred stock units vesting in 25 percent equal increments on the second and third anniversaries of the date of grant and 50 percent on the fourth anniversary of the date of grant.