On Monday, Bernstein SocGen Group initiated coverage on T-Mobile US (NASDAQ:TMUS) stock with a Market Perform rating and set a price target of $265.00.
According to InvestingPro data, T-Mobile has demonstrated remarkable performance with a 54% gain year-to-date and maintains a robust market capitalization of $265 billion. The stock currently trades near its 52-week high of $248.15, reflecting strong investor confidence.
The firm highlighted T-Mobile's transformation from a trailing competitor in the wireless industry to a leader, noting its significant share of the industry's net additions and a subscriber growth rate twice that of the market over the last four years.
This growth is reflected in T-Mobile's solid financial performance, with annual revenue reaching $80 billion and an impressive EBITDA of $30.7 billion. InvestingPro analysis reveals the company maintains a "GOOD" overall financial health score, supported by strong profitability metrics.
The analyst commended T-Mobile for its effective value proposition and brand strength, which now competes closely with its established peers. The expectation is that T-Mobile will maintain its advantage in subscriber growth, with potential for additional revenue from a possibly more relaxed pricing environment.
T-Mobile's foray into Fixed Wireless Access (FWA) home broadband services, leveraging its 5G network, was also mentioned as a key growth driver. The company has acquired around 5% of the U.S. broadband market with expectations to double this share in the next five years. The acquisition of mid-band spectrum from Sprint has been particularly transformative, contributing to Average Revenue Per Account (ARPA) growth and reducing churn.
The analysis predicts that FWA will significantly boost T-Mobile's adjusted EBITDA margin by 2026, potentially increasing it by 50 to more than 100 basis points. This is anticipated to result in EBITDA growing faster than top-line growth.
T-Mobile currently maintains a healthy gross profit margin of 64% and trades at a P/E ratio of 25.7x. For deeper insights into T-Mobile's valuation and growth prospects, including 10 additional ProTips and comprehensive financial analysis, check out the full research report available on InvestingPro.
T-Mobile's trading at a multiple of 10.8 times its projected 2025 EBITDA is the highest among major Mobile Network (LON:NETW) Operators (MNOs) in the past decade. The $265 price target is based on a Discounted Cash Flow (DCF) model and suggests an 11.2 times 2025 EBITDA multiple, which is about a 4-turn premium compared to its peers.
The firm acknowledges T-Mobile's current growth trajectory and suggests it could justify a higher multiple in the future, supported by the expansion of core wireless and FWA subscribers, as well as margin growth.
In other recent news, T-Mobile US has been the center of attention with several significant developments.
The company's CEO recently indicated that the fourth quarter's business activities are heavily weighted towards the end, suggesting potential risks in the latter half of the quarter.
Amid this, T-Mobile has seen impressive revenue growth and subscriber additions, adding 315,000 new postpaid accounts and 865,000 postpaid phone net subscribers, exceeding expectations.
Several analyst firms have provided their perspectives on T-Mobile's performance. Raymond (NS:RYMD) James downgraded the company's stock from Outperform to Market Perform, citing a significant recent price surge. In contrast, Bernstein SocGen Group maintained its Outperform rating with a $220.00 price target, highlighting robust service revenue and core adjusted EBITDA.
Oppenheimer increased T-Mobile's price target to $250, surpassing their estimate of 4.9%, while Scotiabank (TSX:BNS) raised its price target for T-Mobile from $236.00 to $237.00. Benchmark also increased the price target for T-Mobile to $255, responding to strong third-quarter results and positive guidance revisions.
T-Mobile's continued expansion and operational strategies have been noted by Tigress Financial Partners, which maintains a Buy rating on the company's stock. This includes a partnership with OpenAI for an AI-powered customer support platform, an ongoing collaboration with SpaceX Starlink for satellite-based cell service, and the expansion of its Voice over New Radio (VoNR) coverage. These developments highlight T-Mobile's focus on innovation and its potential for continued growth in the telecommunications industry.
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