NEW YORK (TheStreet) -- Shares of T-Mobile US (TMUS) are flat in morning trading after Goldman Sachs lowered its 2015 revenue and EBITDA estimates, driven mainly by the impact of 100,000 fewer estimated postpaid phone net adds in 4Q14 flowing through their 2015 expectations.
"Our lower estimate for 4Q subscribers drives our 2015E revenue lower by $76 million to $31.6 billion and our 2015E EBITDA lower by $23 millon to $7.03 billion. Our long-term EBITDA estimates are modestly lower due to our expectation that TMUS will require higher SG&A to remain competitive," Goldman said.
Goldman expects 4Q14 postpaid phone net adds down to 650,000, versus 750,000 previously, driven by lower gross adds.
Relative to their prior estimates, analysts anticipate a modest incremental impact from Sprint Corp.'s (S) aggressive marketing during 4Q which they believe pushed T-Mobile to launch limited-time promotions late in the quarter.
The firm maintained its subscriber estimates for 2015, saying they had already forecast slower growth based on ongoing competitive headwinds next year and estimate 2015 postpaid phone net adds of 2 million versus 3.7 million in 2014.
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 a generally disappointing performance in the stock itself, unimpressive growth in net income and generally higher debt management risk."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth significantly trails the industry average of 58.3%. 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 -13.59%.
- 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.
- 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.
- 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. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
- You can view the full analysis from the report here: TMUS Ratings Report