On Thursday, T-Mobile US (NASDAQ:TMUS) received a new price target of $220, up from the previous $200, with a maintained Buy stock rating from Benchmark. The adjustment follows T-Mobile's announcement of second-quarter results that outperformed its peers.
The telecom giant added 777,000 postpaid phone customers, surpassing AT&T (NYSE:T)'s 419,000 and Verizon (NYSE:VZ)'s 148,000. T-Mobile also celebrated surpassing 100 million postpaid customers.
The analyst from Benchmark based the new target on a growth relative model, using S&P 500 valuation standards. They suggested that the fair value of T-Mobile's shares could approach or exceed $250 if the company continues its current trajectory of postpaid member growth and average revenue per user (ARPU) gains. T-Mobile's ARPU is projected to rise by up to 3% this year.
T-Mobile's strong performance was evident in their second-quarter financial results, released on Wednesday. The company reported a 4% increase in service revenues to approximately $16.4 billion.
This revenue growth translated into a 9% rise in Adjusted EBITDA to nearly $8.1 billion. Moreover, T-Mobile's adjusted free cash flow saw a significant jump, increasing by 54% to around $4.4 billion.
In addition to the financial successes, T-Mobile updated its guidance for the year. The company raised its forecast for postpaid customer additions by 150,000. It also provided mild but favorable revisions to its operating cash flow, which is now expected to be $50 million better than previously anticipated. Capital expenditures are projected to be $100 million lower, and the adjusted free cash flow forecast has been improved by $150 million.
T-Mobile's Home Internet service also showed consistent growth, adding 406,000 net new homes in the quarter. This continued expansion is in line with the company's pattern of steadily increasing its customer base in this segment.
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