The analyst firm upgraded its rating for the mobile carrier to "buy" from "neutral," and raised its price target for the company to $40 from $37. Citi analysts cited T-Mobile's Un-carrier strategy as a reason for the upgrade, saying the strategy "is showing greater resilience."
Citi analysts also added that T-Mobile's emerging catalysts can "support above-consensus revenue & OIBDA" for 2016. Those catalysts include: "1) expanding its addressable market for both postpaid and prepaid; 2) retaining positive operating leverage; and 3) capturing the remaining MetroPCS synergies through 2016."
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"We believe T-Mobile is retaining favorable traction to take postpaid share within urban markets from its Un-carrier value proposition while the company is digesting an elevated mix of sub-prime customers better than what we previously anticipated," the analysts wrote. "Management indicated porting ratios are up early in 1Q/15 and we believe TMUS can outperform the high-end of its net add guidance with our upwardly revised estimate of 3.7 million with 1.1 million estimated for 1Q15."
TheStreet Ratings team rates T-MOBILE US INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate T-MOBILE US INC (TMUS) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, generally higher debt management risk and relatively poor performance when compared with the S&P 500 during the past year."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth significantly trails the industry average of 61.8%. Since the same quarter one year prior, revenues slightly increased by 9.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Net operating cash flow has increased to $1,062.00 million or 28.57% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -0.08%.
- Compared to other companies in the Wireless Telecommunication Services industry and the overall market on the basis of return on equity, T-MOBILE US INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
- In its most recent trading session, TMUS has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Wireless Telecommunication Services industry. The net income has significantly decreased by 161.1% when compared to the same quarter one year ago, falling from -$36.00 million to -$94.00 million.
- You can view the full analysis from the report here: TMUS Ratings Report