T-Mobile US Inc TMUS Shares rose in early trading Thursday after the company announced strong third-quarter results.
The company announced its results during an exciting earnings season. Here are some key takeaways from analysts.
Analyst Timothy Horan maintained an Outperform rating, while raising the price target from $215 to $250.
T-Mobile US reported revenue of $20.2 billion, up 4.7% and exceeding expectations by 120 basis points (bps), Horan said. The company generated ‘industry’ service revenue growth of 5.1%, driven by the highest ARPA (postpaid average revenue per account)) seven-year growth and higher-than-expected postpaid phone additions, he added.
The company’s net postpaid phone additions of 865,000, which exceeded the estimate by 65,000, exceeded that of Verizon Communications Inc. VZ And AT&T Inc T combined, the analyst said. The company is on track for about 3 million new phones this year, he further said.
Analyst Maher Yaghi reiterated a Sector Perform rating and raised the price target to $237 from $236.
“T-Mobile reported another strong quarter with continued industry subscriber growth, coupled with a strict focus on operating costs, leading to a modest increase in EBITDA, supporting another guidance increase,” Yaghi wrote in a note.
The company remained well positioned to maintain industry-leading growth rates in both phone volumes and cash generation, “as we continue to see additional growth potential in the suburban, rural and business segments in mobile, as well as a path to additional market share gains in broadband . ”said the analyst.
Analyst Brandon Nispel reaffirmed the Overweight rating and raised the price target from $230 to $252.
T-Mobile US reported total services revenue of $16.73 billion, up 5.1% year over year, beating the consensus of 4.7% growth, Nispel said. The company’s adjusted EBITDA of $8.22 billion came in higher than the consensus of $8.12 billion, he added.
Postpaid phone additions of 865,000 exceeded the consensus of 749,000, driven by better-than-expected customer churn, the analyst said. “We think one of the most impressive achievements is that TMUS has accelerated postpaid phone subscriber growth over the past two quarters, while also increasing prices, driving ARPU/ARPA higher,” he further wrote.
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Analyst James Schneider maintained a buy rating and raised the price target from $220 to $250.
The number of postpaid phone networks was higher than expected, while the number of fixed wireless access networks of 415,000 also exceeded the consensus of 405,000, Schneider said. Postpaid phone churn was 0.86%, versus a consensus of 0.90%, he added.
T-Mobile US has raised its full-year net postpaid customer forecast to 5.6-5.8 million, up from its previous forecast of 5.4-5.7 million, while its net postpaid phone forecast is at 3 million, according to the analyst. The company also raised its adjusted EBITDA guidance to $31.6-$31.8 billion from $31.5-$31.8 billion. “T-Mobile’s guidelines imply room for profit,” he further wrote.
Analyst Matthew Harrigan reiterated an Equal-Weight rating and raised the price target to $255 from $250.
The company’s core EBITDA grew “a very strong” 8.9% to $8.222 billion, Harrigan said. “The net customer postpaid additions were a testament to the pull of T-Mobile’s real and perceived 5G leadership with an advance of 1.575 million, including the best postpaid phone additions in a decade of 865K,” he added.
The ARPA change “suggests that management’s guidance is quite credible, with potential actual upside if T-Mobile continues to gain momentum in the affluent urban market seeking the superior 5G network,” the analyst said.
Analyst Jonathan Atkin reaffirmed an Outperform rating and $232 price target.
The company’s free cash flow was 11% above consensus, “driven by higher earnings and working capital timing,” Atkin said.
“The company has continued its momentum in gaining market share across markets and consumer cohorts,” the analyst said. Management raised full-year expectations for postpaid net additions by $150,000 at the midpoint and adjusted core EBITDA by $50 million at the midpoint, he added.
TMUS Price Promotion: Shares of T-Mobile US was up 4.96% to $231.99 at the time of publication on Thursday.
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