Virgin Mobile USA goes public

Virgin Mobile USA Inc. shares rose 5% in their market debut Thursday as concerns about the cellphone service’s growth prospects prompted one analyst to give it a “sell” rating.

The venture of Sprint Nextel Corp. and Richard Branson’s Virgin Group raised $412.5 million in its initial public offering, selling 27.5 million shares for $15 apiece, at the low end of a forecast range of $15 to $17.

The stock initially rose 11% to $16.63 before retreating to close at $15.75.

Todd Rethemeier, an analyst for Soleil Securities affiliate SurTerre Research, started coverage of Virgin Mobile USA with a “sell” rating and a share-price target of $10, citing what he called red flags, including the company’s medium-term profit prospects.

Virgin Mobile, based in Warren, N.J., said it would use the IPO proceeds mainly to repay debt and buy out 16.7% of Sprint Nextel’s stake in the company.