In his review of fourth quarter results issued last night, EvercoreISI telecom analyst Jonathan Schildkraut and his team headlined their thoughts with “Positive Trajectory Continues,” he said his team of analysts” remain positive on TMUS given the robust FCF, ongoing network improvements, and continued momentum in subs metrics. Maintain BUY recommendation and increase price target to $48 (from $46).”
On Tuesday afternoon, before T-Mobile released its latest report card, Barclay’s analyst Amir Rozwadowski was already smitten with the “uncarrier.” In his “Roz Report: Looking Past T-Mobile’s Earnings,” he observed “we recognize that growth-oriented stocks are increasingly out of favor against the current market backdrop (thereby compressing valuation multiples). However, we do not expect any material data points to emerge *(from the conference call) that suggest T-Mobile’s share gain and margin expansion/cash flow inflection story has diminished.”
But what he discovered in doing research on the company’s continuing progress is that success is coming at some cost to the competition. “Our checks suggest both AT&T and Verizon are taking a competitive back seat in the first quarter, leading us to expect phone-only net losses from both operators,” the analyst wrote. “While Sprint has extended its “50% off” campaign, we do not expect to see a material impact to T-Mobile’s porting levels. Tempered promotional activity coupled with the carrier’s typical counter seasonal marketing efforts should, therefore, continue to support its share momentum in the near-term. In our view, the carrier’s improved reach via its low band spectrum deployment should also provide additional support for its ability to expand its addressable market.
But as the FCC’s spectrum auction nears, Rozwadowski warns that T-Mobile’s positioning in the broadcast auction and its sector positioning post its completion “are likely to be the key factors influencing the stock’s trajectory in the near term. Comcast’s confirmed potential interest in participating highlights that T-Mobile may not be immune to bidding competition despite the reserve allocation that is in place.
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