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Major Analysts Update SoftBank Outlook To ‘Outperform’

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(Credit: KAZUHIRO NOGI/AFP/Getty Images) SoftBank Group Corp. Chairman and CEO Masayoshi Son delivers a speech during a press briefing to announce its consolidated earnings results for Q2/FY2015 in Tokyo on November 4, 2015. SoftBank Group announced its group net profit in the April to September period fell 23.9 percent year on year to 426.68 billion yen (3.52 billion USD). JAPAN-COMPANY-EARNINGS-SOFTBANK
February 10
6:11 AM 2016

Concern over billionaire Masayoshi Son's debt load at SoftBank Group Inc. has been reported to grow higher. Sprint Corp., the SoftBank subsidiary in the US is struggling to turn around due to volatility in global markets.

SoftBank's default debt insuring cost has risen by 95 basis points this year to 350 basis points on February 8. The increase is four times compared to the Markit iTraxx Japan credit-default swap index that puts SoftBank near its five-year high of 360 basis points, according to a report published in Bloomberg.

Stock market analysts have updated their consensus ratings on shares of SoftBank Corp recently. Seven analysts have rated 'buy', ten analysts 'outperform', four analysts 'hold' while one opted for 'underperform' reports Risers And Fallers.

The stock of SoftBank Corp. (Japan) has decreased 2.19% or $0.47 to hit $21.04 during the last trading session on February 8. The stock rate slashing has taken place ahead of releasing earning figures.

Around 152,531 shares have been traded on that day. The share price has declined 27.60% since July 2, 2015 and still continues to fall downward. The stock has underperformed by 18.3% against assumptions of S&P500, reports Wallstreet.

Sprint has been analyzed as the prior concern from SoftBank's point of view. Its turnaround efforts have apparently failed to convince the credit market.

However, Sprint appears to be SoftBank's second most valuable holding while Alibaba Holding Ltd. takes the lead. Share price of Sprint has fallen around 30% through out this year compared to 25% slumping in Alibaba's stock.

SoftBank has invested $22 billion for acquiring controlling stake in Sprint in 2013 and consumed more stock later on. Mounted loss has reduced the investment to around $8.4 billion.

Shares of SoftBank have been witnessed to rebound from the lowest in almost two years during last month due to signs of progress. Job cuts and shutting call centers have reduced Sprint's expenditure by $2.5 billion. These efforts have raised its profit forecast while boosting cash and cash equivalents.

iTraxx Japan index has put SoftBank as the second highest credit risk posing group following Toshiba Corp. However, Sharp's bond risk has plunged further last week after exhibiting signs of getting rescued by Taiwan's Foxconn Technology Group.

SoftBank has invested $22 billion to own the controlling shares of Sprint. Due to volatile market situations, value of the investment has been reduced to $8.4 billion. The default investment has forced the stock analysts to change their outlooks for SoftBank and a major portion of them has marked the group as an outperformer. 

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