Shares of Sprint would likely plummet to less than $3 if an expected tie-up with T-Mobile were to fall through, according to MoffettNathanson.

The two carriers have been in merger talks for weeks and are reportedly “putting the finishing touches” on a deal that could be announced by the end of the month. The move would consolidate the market significantly, resulting in three dominant network operators of roughly similar size.

The election of President Donald Trump coupled with the conclusion of the FCC’s incentive auction several months ago has given rise to a flurry of speculation regarding potential M&A activity in the mobile market. And much of that talk has centered on some kind of merger between the nation's two smaller major wireless carriers.

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Whether a Sprint/T-Mobile tie-up would actually gain regulatory approval, though, is far from clear. Deutsche Bank analysts said earlier this week they were “bearish” on a merger getting the green light, noting that the odds of approval would likely be much slimmer if it isn’t consummated by the time midterm elections are held in November 2018.

And Reuters reported late yesterday that “career staff” at the U.S. Department of Justice that would be tasked with looking into a deal would likely recommend that it be rejected. Those staffers would prefer to allow T-Mobile to continue to gain market share from Verizon and AT&T on its own, the news outlet reported.

That would be particularly bad news for Sprint, Craig Moffett of MoffettNathanson wrote this morning in a note to investors. While the chances of a failed merger appear to be largely baked into the shares of T-Mobile, Sprint investors appear to be betting heavily that the two carriers will eventually merge.

Sprint shares were trading at $7.16 mid-day Thursday.

“To us, the downside risks of the deals falling through—a very real possibility—have not been appropriately studied,” Moffett wrote. “Absent the prospect of a merger—that is, if a merger were definitively rejected—not only would the synergies of a deal be lost, but the warranted multiple of the companies would decline.

“These risks are asymmetrically skewed to the downside in Sprint, whose stock appears to price in an 85% probability of deal approval,” Moffett continued. “We estimate that Sprint’s stock would fall to under $3 on a standalone basis without the expectation of M&A…. T-Mobile, on the other hand, appears more reasonably valued, with downside of only 13%, and modest probability-weighted upside to today’s price.”