NEW YORK (AP) -- Shares of Leap Wireless International Inc., the parent of the Cricket cellphone service, fell sharply Monday after a JP Morgan analyst downgraded the stock from "Neutral" to "Underweight."
Analyst Philip Cusick said the San Diego-based company is losing customers in the face of tough competition and is unlikely to be bought by a larger company this year.
The stock fell 46 cents, or 7.4 percent, to $5.76 in midday trading. The shares are at their lowest level in two weeks.
Cusick's downgrade came the day before the company reports first-quarter results.
Leap provides low-cost phone service with no contracts. It has its own network in some cities, and buys wholesale access to Sprint's network in other cities. It had 5.3 million subscribers at the end of last year, making it the seventh-largest cellphone company in the country.
After years of growth, Leap lost subscribers last year, and Cusick expects it to lose more this year. The company's network offers mainly third-generation, or "3G" data speeds, and the company lacks the money for a wider "4G" buildout, he said.
MetroPCS Communications Inc., which has a similar business model but is larger, is being acquired by T-Mobile USA, and Sprint Nextel Corp. has two suitors. Cusick doesn't see a buyer emerging for Leap this year, but didn't elaborate on the reason.
A representative from Leap said the company does not comment on analyst reports.