Benchmark has reiterated its Buy rating on T-Mobile US (NASDAQ: NASDAQ:TMUS) with a steadfast price target of $250.00.
The firm's analyst supports this target by referencing T-Mobile management's guidance provided during their September Investor Day, which extends through 2027. The valuation is based on a relative growth approach that aligns with S&P 500 valuation parameters.
The analyst from Benchmark is optimistic about T-Mobile's prospects, particularly ahead of the company's earnings report due after market close tomorrow. The price target is predicated on a 20x normalized Shiller P/E multiple, which is considered conservative compared to current S&P 500 levels relative to projected 2025 earnings.
Benchmark's analysis suggests that T-Mobile is well-positioned to outperform its Mobile Network (LON:NETW) Operator (MNO) peers. The firm anticipates that T-Mobile will continue to deliver superior results, bolstered by a significant capital return plan. T-Mobile has announced intentions to return $50 billion to shareholders through 2027, a strategy that could help mitigate market volatility.
The analyst's confidence in T-Mobile is also underpinned by the company's expected sustainable post-forecast Core EBITDA minus CapEx growth, which is estimated at a reasonable 2.5%. This growth projection plays a key role in the valuation and the maintained price target.
In other recent news, T-Mobile US has been the focus of several significant developments. Ahead of the company's third-quarter results, Citi has raised T-Mobile's stock target to $254, maintaining a Buy rating.
The firm predicts solid third-quarter outcomes, including an expected service revenue growth of 4.6%. T-Mobile's investment in the fiber-to-the-home (FTTH) business is anticipated to contribute positively to its long-term financials.
In a collaborative effort with SpaceX, T-Mobile has received temporary approval from the Federal Communications Commission (FCC) to provide direct-to-cell coverage via Starlink satellites in North Carolina, an area recently affected by a hurricane. This initiative aims to restore wireless and internet services.
On the financial front, Deutsche Bank (ETR:DBKGn) has increased its price target for Deutsche Telekom (OTC:DTEGY) to €33.00, reflecting a positive view on the company's year-to-date total shareholder return. In another development, T-Mobile US Inc has agreed to pay $31.5 million following significant data breaches over the past three years, which includes a civil penalty and an investment in enhancing the company's cybersecurity measures.
Meanwhile, BofA Securities has maintained its Buy rating and $220.00 stock price target for T-Mobile US, citing the company's strong growth outlook. RBC Capital has also revised its outlook on T-Mobile US, raising the stock's price target to $232.
InvestingPro Insights
T-Mobile US (NASDAQ:TMUS) continues to demonstrate strong performance, aligning with Benchmark's optimistic outlook. According to InvestingPro data, the company boasts a market capitalization of $259.92 billion, reflecting its significant presence in the wireless telecommunication services industry. T-Mobile's revenue for the last twelve months as of Q2 2024 stands at $79.1 billion, with a healthy gross profit margin of 63.6%.
InvestingPro Tips highlight T-Mobile's financial strength and market position. The company has a perfect Piotroski Score of 9, indicating robust financial health. This aligns well with Benchmark's positive outlook and the anticipated superior results mentioned in the article. Additionally, T-Mobile is trading at a low P/E ratio relative to near-term earnings growth, with a PEG ratio of 0.46, suggesting potential undervaluation despite its recent strong performance.
The stock's impressive 65.14% total return over the past year and its trading near its 52-week high further support Benchmark's bullish stance. These metrics, combined with the company's announced $50 billion capital return plan through 2027, underscore T-Mobile's potential for continued shareholder value creation.
For investors seeking more comprehensive analysis, InvestingPro offers 14 additional tips for T-Mobile, providing deeper insights into the company's financial health and market position.
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