On Friday, T-Mobile US, Inc. (NASDAQ:TMUS) experienced a shift in its stock rating as Raymond James downgraded the company from Outperform to Market Perform. The firm's decision comes after a reassessment of the stock's valuation in relation to its recent price surge.
The Raymond James analyst highlighted that the prior investment thesis for T-Mobile has been realized, and they are not inclined to adjust valuation multiples to support a higher target in the face of the stock's significant rise. They noted that since the previous downgrade from Strong Buy to Outperform earlier in October, T-Mobile's shares have climbed 13%, surpassing the year-end 2025 price target of $221 that had been set.
The analyst emphasized a cautious stance, choosing not to chase the stock's upward movement any further. This decision reflects a consideration of potential risks at various levels, including within the company, the broader industry, and the macroeconomic environment.
The downgrade represents a shift to a neutral position on T-Mobile's stock, as Raymond James moves to the sidelines. The firm's previous optimistic outlook has been tempered by the stock's performance, which has exceeded expectations in the short term.
The announcement from Raymond James is likely to be noted by investors and market watchers, as it signals a change in the perceived growth potential of T-Mobile's stock in the near future. The firm's stance now suggests a wait-and-see approach as they monitor the company's progress against a backdrop of various risks.
In other recent news, T-Mobile US has been the subject of several positive adjustments by analysts following robust earnings and revenue growth. Bernstein SocGen Group maintained its Outperform rating and $220.00 price target for T-Mobile, emphasizing the company's strong performance, including service revenue and core adjusted EBITDA exceeding consensus estimates. The company also saw robust growth in postpaid accounts, adding 315,000 new accounts in the quarter.
Oppenheimer increased T-Mobile's price target to $250, highlighting a service revenue growth of 5.1%, surpassing their estimate of 4.9%. The firm also noted a significant addition of 865,000 postpaid phone net subscribers, exceeding expectations. Scotiabank raised its price target for T-Mobile from $236.00 to $237.00, following the company's announcement of a robust quarter.
Benchmark raised the price target for T-Mobile to $255, in response to strong third-quarter results and positive guidance revisions. TD Cowen increased the mobile carrier's price target to $250, prompted by T-Mobile's strong performance, exceeding expectations on EBITDA, revenue, and free cash flow.
InvestingPro Insights
T-Mobile's recent stock performance aligns with several InvestingPro metrics and tips. The company's stock is trading near its 52-week high, with a remarkable 68.23% total return over the past year. This strong performance is reflected in InvestingPro Tips, which highlight T-Mobile's high returns over various timeframes, including the last month, three months, and decade.
Despite the recent downgrade, T-Mobile's financial health appears robust. The company boasts a revenue of $80.01 billion over the last twelve months, with a healthy gross profit margin of 63.83%. An InvestingPro Tip suggests that T-Mobile is trading at a low P/E ratio relative to its near-term earnings growth, with a PEG ratio of 0.72, indicating potential undervaluation despite the recent price surge.
For investors seeking more comprehensive analysis, InvestingPro offers 13 additional tips for T-Mobile, providing a deeper understanding of the company's market position and potential future performance.
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