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JPMorgan's Q3 Wireless Cheat Sheet

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JPMorgan's Q3 Wireless Cheat Sheet

Earnings season is around the corner and telecom companies will be reporting their results within the next two weeks. Here's what JPMorgan is expecting. 

The Analyst

JPMorgan's Philip Cusick:

Maintains AT&T Inc. (NYSE: T) at Neutral with an unchanged $36 price target.

Maintains Verizon Communications Inc. (NYSE: VZ) at Overweight with a price target lifted from $58 to $59.

No rating on T-Mobile Us Inc (NASDAQ: TMUS) and Sprint Corp (NYSE: S).

AT&T

  • AT&T should show 150,000 postpaid net adds in the quarter.
  • Churn should move from 1.02 percent in the second quarter to 1.07 percent.
  • Service revenue growth should rise by 1.5 percent, which would fall short of management's recent commentary of 2 percent.
  • Margins should grow in both the third and fourth quarter.

Verizon

  • Verizon should show 500,000 postpaid net adds in the quarter.
  • Postpaid churn should remain unchanged at 1 percent.
  • Adjusted EBITDA of $11 billion on a 68.7-percent service margin.
  • The wireline margin should come in below the Street's estimate at 19.2 percent.

T-Mobile

  • T-Mobile's gross add share should remain stable with a postpaid phone net add of 650,000 versus a prior estimate of 625,000.
  • Churn should move higher by 11 basis points from the second quarter but down 17 basis points year-over-year.
  • The equipment revenue estimate is lowered from $2.4 billion to $2.33 billion due to a lower volume of industry activity.
  • The core EBITDA estimate of $2.88 billion is approximately $40 to $50 million short of the Street's estimate.

Sprint

  • Postpaid phone net adds should come in at negative 60,000 after management's concerning commentary of a 20-basis point increase in postpaid voice churn.
  • Sprint's churn uptick shouldn't be a surprise, as the company pulled back on promotional activity based on price.

Related Links:

UBS Likes AT&T's Risk-Reward Profile After EBITDA, Time Warner Deal Pressure Share Price

Verizon: The Dow Powerhouse Few Are Discussing

Photo courtesy of Apple. 

Posted-In: JPMorgan Philip CusickAnalyst Color Price Target Previews Reiteration Analyst Ratings Trading Ideas Best of Benzinga

 

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