Scotiabank has adjusted its price target for T-Mobile US (NASDAQ: NASDAQ:TMUS), increasing it to $197.00 from the previous $194.50. The firm has kept its Sector Outperform rating on the stock.
The adjustment on Thursday comes as T-Mobile focuses on expanding its total addressable market (TAM) by delving into fiber services, aiming to create a more integrated offering of wireless and wireline services in the United States.
The analyst from Scotiabank noted that while this strategic move by T-Mobile would require some initial capital investment, the company is positioned to manage these expenditures while continuing its commitment to its capital return program for investors.
The firm anticipates that T-Mobile's approach to selling bundled services will yield operational leverage and assist in reducing customer turnover in its profitable wireless segment.
Scotiabank forecasts that T-Mobile's growth in 2025 will be primarily driven by the wireless sector, with an expected increase in EBITDA of about 6%-7%. The analyst suggests that these projections might be on the conservative side, as there is potential for additional cost savings that could surpass current expectations.
Meanwhile, Scotiabank increased its price target for T-Mobile from $194.50 to $197.00, maintaining its Sector Outperform rating. The adjustment came as T-Mobile focused on expanding its market by delving into fiber services, aiming to create a more integrated offering of wireless and wireline services.
Similarly, Benchmark upgraded T-Mobile's stock, raising the price target from $200 to $220, following T-Mobile's second-quarter results that outperformed its peers.
RBC Capital also increased T-Mobile's price target from $189.00 to $200.00, retaining its Outperform rating. This revision follows T-Mobile's second-quarter financial results for 2024, which slightly surpassed consensus estimates in terms of revenue and EBITDA.
T-Mobile's management responded to the positive performance by raising its forecast for postpaid net additions and free cash flow, while slightly reducing the midpoint of its capital expenditure guidance.
InvestingPro Insights
As T-Mobile US (NASDAQ:TMUS) makes headway in expanding its market through integrated wireless and wireline services, InvestingPro data and tips offer additional context for investors considering the company's stock. With a market capitalization of $214.2 billion and a forward-looking P/E ratio of 20.11, T-Mobile is trading at a valuation that may attract investors looking for growth at a reasonable price. The company's PEG ratio, which stands at a low 0.38, suggests that its earnings growth could be undervalued relative to its peers.
Adding to this, two InvestingPro Tips highlight the company's strategic financial management: T-Mobile boasts a perfect Piotroski Score of 9, indicating a healthy financial state, and management has been actively engaged in share buybacks, signaling confidence in the company's value. Furthermore, T-Mobile's stock is known for low price volatility, which could appeal to investors seeking stability in their portfolio. It's also worth noting that analysts have revised their earnings estimates upwards for the upcoming period, reflecting optimism about the company's financial prospects.
For readers interested in a deeper dive into T-Mobile's financial performance and future outlook, InvestingPro offers additional tips and insights. These include the company's performance in the Wireless Telecommunication Services industry, its profitability over the last twelve months, and its strong return over the last five years. To explore these insights further, readers can visit InvestingPro for a comprehensive list of tips and metrics tailored to T-Mobile's stock.
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