The firm also reiterated its price target of $25 for the mobile communications company.
"Subscriber momentum cannot be profitably sustained, the stock remains expensive, and strategic options represent limited upside or are simply non-existent," said analysts at Bank of America/Merrill Lynch. "Recent results show the company is struggling to balance subscriber growth and profitability even as churn, bad debt and competitive risks grow more intense."
Separately, 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 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 60.5%. 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 -8.07%.
- 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