Market Overview

Deutsche Bank Responds To Investor Pushback On Its T-Mobile Upgrade

Share:
Deutsche Bank Responds To Investor Pushback On Its T-Mobile Upgrade

Analyst at Deutsche Bank last week upgraded T-Mobile US Inc (NASDAQ: TMUS), which received some pushback from investors.

The Analyst

Deutsche Bank's Matthew Niknam maintains a Buy rating on T-Mobile's stock with an unchanged $65 price target.

The Thesis

One of the most notable critiques to the upgrade stems from the maturing and highly competitive wireless market and entry of Cable MVNOs, which could limit any upside for T-Mobile, Niknam said in a note. Granted, it's likely T-Mobile will show decelerating growth moving forward but the analyst's three-year service revenue compounded annual growth rate through 2020 of 6 percent implies its growth rate is "substantially ahead" of each one of its peers.

T-Mobile is expected to return cash to shareholders but some investors think the company will use its capital for spectrum acquisitions or accelerated capex, the analyst said. To this the analyst clarified that capital return to shareholders implies a flattish balance sheet leverage at 2.5 times through 2020, and the company already has "substantial amounts" of unused spectrum capacity.

Price Action

Some investors are shying away from the wireless market as a whole, but the analyst thinks T-Mobile's stock is "appealing" at current levels. Specifically, the stock is trading at 6x 2019E (Cash) EBITDA, which is actually at the low end range of its rivals who trade anywhere from 6-7.5x yet T-Mobile is projected to post faster growth.

Shares of T-Mobile are higher by 4 percent since the start of 2017.

Related Links:

What Wall Streets Thinks Of The Canceled Sprint-T-Mobile Deal

What's Up With Sprint And T-Mobile?

Image: Mike Mozart, Flickr

Latest Ratings for TMUS

DateFirmActionFromTo
Aug 2019DowngradesOutperformPerform
Aug 2019MaintainsStrong Buy
Jul 2019MaintainsNeutral

View More Analyst Ratings for TMUS
View the Latest Analyst Ratings

Posted-In: Deutsche Bank Matthew Niknam wireless Wireless CarriersAnalyst Color Analyst Ratings Best of Benzinga

 

Related Articles (TMUS)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
WENMorgan StanleyMaintains22.0
JAZZBernsteinReinstates150.0
XGNCantor FitzgeraldInitiates Coverage On18.0
LOOPRoth CapitalInitiates Coverage On14.0
SNABairdMaintains165.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com

Rod Lache Lays Out The Tactical Reason To Stop Buying CarMax Shares

A Big REIT ETF Is Changing Indexes