Communications Sector

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T-Mobile US (TMUS) - >>> A giant of its industry. T-Mobile is one of the best-known names in the US wireless business, and is the second-largest provider of wireless networking services in the US market.


https://finance.yahoo.com/news/end-bear-market-may-sight-204211341.html


As of the end of 2022, the company had 1.4 million new postpaid accounts for the year, and a total net customer count of 113.6 million. T-Mobile is a leader in the rollout of 5G services in the US, and boasted 2.6 million high-speed internet customers at the end of 2022.

Large customer counts and hefty market share have led to strong earnings results. T-Mobile’s last quarterly release, for 4Q22, showed $1.18 in GAAP EPS, beating the forecast by 8 cents, or 7%, and rising an impressive 247% year-over-year.

The company achieved those earnings results despite a modest miss in revenue. The quarterly top line of $20.3 billion was $39 million below expectations, and slipped 2.4% y/y.

The free cash flow, however, really stood out. T-Mobile generated $2.2 billion in FCF for Q4, and its full-year FCF figure, of $7.7 billion, shown an ‘industry-leading’ increase of 36% while also beating previously published guidance. The company’s cash generation made it possible to support share value by repurchasing 21.4 million shares in 2022 for a total of $3 billion.

This stock got the nod from Simon Flannery, another of Morgan Stanley’s 5-star analysts. Flannery wrote of TMUS: “The company has a clear growth strategy predicated primarily on share gains in key, underpenetrated markets: small town/rural, enterprise and top 100 market network seekers. Additionally, T-Mobile has led the way on fixed wireless home broadband as a brand new market opportunity for the company that’s expected to scale to 7-8mn subs by 2025.”

Tracking this stance forward, Flannery rates TMUS shares an Overweight (i.e. Buy) with a $175 price target indicating ~22% upside for the next 12 months. (To watch Flannery’s track record, click here)

No fewer than 14 of Wall Street’s analysts have reviewed T-Mobile’s shares recently, and they’ve given the stock 12 Buys and 2 Holds for a Strong Buy consensus rating. The shares are trading for $143.90, with an average price target of $181 to suggest ~26% upside potential by the end of this year.

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