T-Mobile US, Inc. (TMUS), headquartered in Bellevue, Washington, is a nationwide wireless service provider that provides reliable connectivity through its 4G LTE and transformative 5G network. Valued at $197.90 billion by market cap, the company provides its voice, messaging, and data services to customers in the postpaid, prepaid, and wholesale and other services through its flagship brands, T-Mobile, Metro by T-Mobile, and Mint Mobile.
Shares of this leading wireless service provider have marginally outperformed the broader market over the past year. TMUS has gained 25.3% over this time frame, while the broader S&P 500 Index ($SPX) has rallied 25.2%. In 2024, TMUS stock has gained 5.6%, underperforming SPX’s 10.4% rise on a YTD basis.
Narrowing the focus, TMUS’ gains over the past 52 weeks are easily overshadowed by the S&P 500 Communication Sector SPDR (XLC). The exchange-traded fund has gained about 33% over this period. Moreover, the ETF’s 13.8% returns on a YTD basis outshine TMUS’ gains over the same time frame.
On May 28, TMUS announced that it acquired a majority in its rival U.S. Cellular (USM) in a deal valued at $4.40 billion. The acquisition included U.S. Cellular’s mobile phone customers, a network of retail stores, and some of its wireless spectrum. The deal would enable TMUS to use USM’s wireless spectrum, helping improve its internet coverage in rural areas of America. The stock closed up almost 0.8% on the announcement day.
On Apr. 25, TMUS reported its Q1 results with postpaid net account additions of 218 thousand and postpaid net customer additions of 1.2 million. The company’s total revenues rose 6.5% year-over-year to $19.59 billion, and its net income and EPS came in at $2.37 billion and $2, increasing 22.4% and 26.6% year-over-year, respectively. TMUS also raised its fiscal 2024 guidance with postpaid net customer additions between 5.2 million and 5.6 million, up from the previous guidance of between 5 million and 5.5 million. The stock declined marginally on the earnings release day.
For the current fiscal year, ending in December, analysts expect TMUS’s EPS to grow 30.2% to $9.02 on a diluted basis. The company’s earnings surprise history is mixed. It beat the consensus estimate in three of the last four quarters while missing the forecast on another occasion.
Among the 19 analysts covering TMUS stock, the consensus rating is a “Strong Buy.” That’s based on 15 “Strong Buy” ratings, three “Moderate Buys,” and one “Hold.”
This configuration is slightly more bullish than three months ago, with 14 suggesting a “Strong Buy.”
Recently, Benchmark analysts reiterated their “Buy” rating on TMUS stock with a price target of $200, implying a potential upside of 18.4% from current levels.
The mean price target of $187.70 represents an 11.1% premium compared to TMUS’ current price levels. The Street-high price target of $205 suggests an upside potential of 21.4%.
On the date of publication, Dipanjan Banchur did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
