“As anticipated, T-Mobile’s subscriber trends (both net adds and churn) for the quarter were in-line with expectations. However, the company’s better than expected EBITDA (34.8% margins vs. our 31.5% estimate), which continues to complement strong subscriber growth and free cash flow ($802 million vs. our $270 million estimate) were notable standouts,” Barclays telecom analyst Amir Rozwadoski told investors in a note yesterday. “We recognize there are a number of factors positively impacting the latter two metrics (i.e. a gain from a spectrum license transaction and proceeds from the sale of receivables). However, even when excluding these impacts the carrier’s results continue to support our margin expansion/cash flow inflection thesis.” Barclays has a overweight/neutral rating on the issue with a price target of $45 a share.
“Guidance for 2016 is largely in-line and we expect estimates to rise, as the company usually guides conservatively (they beat 2015 net adds by 1.8 million adds this year),” New Street Research’s Jonathan Chaplin wrote to investors in his results recap. “We will remain at the high end of the range on both net adds and EBITDA. T-Mobile has been unduly punished on the back a flurry of pricing moves by competitors, concerns about the upcoming auction and pressure on levered stocks in general. Results and guidance show strong momentum continuing in the face of all of these factors. We would buy the stock here.”
“Subscriber growth continues to be solid,” MoffettNathanson analyst Craig Moffett said in a research note while BTIG Research analyst Walter Piecyk said, “T-Mobile was the only operator to not disappoint on ARPU, the monthly phone payments of its customers.”
T-Mobile shares increased 40 cents or 1.1 percent to close Wednesday at $36.85.
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