On Thursday, T-Mobile US Inc. (NASDAQ:TMUS) had its price target increased to $220 from $210 by Evercore ISI, while the firm maintained an Outperform rating on the stock.
"Overall, we continue to see TMUS as the most attractive fundamental growth story across our cable/telco coverage," said the analysts, emphasizing the company's potential for increased investor interest due to its opportunities for subscriber gains and strong balance sheet.
The analyst noted that T-Mobile stands out for its straightforward strategy to capture more market share and its financial stability. These factors are particularly appealing to investors seeking defensive stock options in times of market uncertainty. The new price target is based on valuation multiples of 16.1x, 14.2x, and 13.4x the company's projected fully-taxed free cash flow for the years 2025, 2026, and 2027, respectively.
The report highlighted that any significant increase in T-Mobile's stock value would likely depend on upward revisions to the company's recently provided EBITDA and free cash flow projections. However, the analyst suggested that such revisions are not expected in the near term, and as a result, further stock multiple expansion might be limited.
In other recent news, T-Mobile has unveiled an optimistic financial outlook for 2027, surpassing Wall Street's expectations. The telecom company projects service revenue between $75 billion and $76 billion, EBITDA of $38 billion to $39 billion, and free cash flow in the range of $18 billion to $19 billion. These figures represent compound annual growth rates of approximately 5%, 7%, and 8% respectively. In addition, T-Mobile plans to return $50 billion to shareholders, which is over 20% of its current market cap, and anticipates having $20 billion available for other mergers and acquisitions, debt reduction, or further capital returns by 2027.
T-Mobile also announced a significant increase in its quarterly dividend to $0.88 per share, a 35% rise from the previous quarter, indicating a robust financial position. The company aims to acquire 12 million 5G broadband customers by 2028 and boost its EBITDA by $10 billion by 2027 as part of a comprehensive three-year growth strategy.
In terms of strategic partnerships, T-Mobile has teamed up with OpenAI and NVIDIA (NASDAQ:NVDA). These collaborations aim to drive innovation in radio access networks, enhance customer experiences, and unlock new business opportunities. Analysts from UBS reiterated a Buy rating on T-Mobile, while KeyBanc Capital Markets increased its price target for the company's stock, reflecting confidence in the telecom giant's future prospects.
InvestingPro Insights
Adding to Evercore ISI's optimistic outlook for T-Mobile US Inc. (NASDAQ:TMUS), InvestingPro data solidifies the company's strong position in the market. With a market capitalization of $229.48 billion and a P/E ratio that stands at 24.48, T-Mobile appears to be trading at a reasonable valuation given its near-term earnings growth potential. Notably, the company has achieved a PEG ratio of 0.42 in the last twelve months as of Q2 2024, suggesting that its stock price is in line with expected earnings growth, which may be an attractive point for value-oriented investors.
InvestingPro Tips further highlight T-Mobile's financial health and market performance. The company has maintained a perfect Piotroski Score of 9, indicating a robust financial situation, and has been trading near its 52-week high, reflecting strong market confidence. Moreover, T-Mobile has been acknowledged as a prominent player in the Wireless Telecommunication Services industry, which aligns with Evercore ISI's recognition of its competitive edge. For those seeking additional insights, InvestingPro offers numerous other tips on T-Mobile, including analysis on short-term obligations, profitability predictions, and historical returns, all available at https://www.investing.com/pro/TMUS.
These InvestingPro Insights complement the analysis provided by Evercore ISI, offering investors a comprehensive view of T-Mobile's financial standing and market potential. The data and tips provided here are just a glimpse of the extensive analysis available on InvestingPro, where investors can access over nine additional tips to inform their investment decisions.
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