Leap Wireless Shares Jumped: What You Need to Know

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Leap Wireless (NAS: LEAP) leaped as high as 13% on Wednesday after Bernstein Research analyst Craig Moffett upgraded the wireless service specialist from market perform to outperform.

So what: Along with the upgrade, Moffett offered a new price target on the stock of $12, representing a whopping 70% worth of upside to yesterday's close. The stock has been battered over the past few months -- down over 50% since the start of July -- on unexpectedly high churn rates, so today's rally serves as a much-needed boost for embattled Leap bulls.

Now what: I wouldn't get too excited over the stock just yet. While Leap -- as well as close rival MetroPCS (NYS: PCS) -- may be benefiting somewhat from an industrywide trade-down, its high debt load, steadily declining operating margins, and long history of inefficiency are just too worrisome for a long-term commitment. More short-term pops are certainly possible, especially with all the uncertainty surrounding the proposed AT&T (NYS: T) and T-Mobile deal, but betting big on them doesn't seem prudent.

Interested in more info onLeap?Add it to your watchlist.

At the time this article was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Motley Fool newsletter services have recommended buying shares of AT&T. Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.

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