Oppenheimer Raises Price Target on T-Mobile (TMUS) to $55 Following 3Q Report
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Oppenheimer reiterated an Outperform rating on T-Mobile US, (NASDAQ: TMUS), and raised the price target to $55.00 (from $48.00), following the company's 3Q earnings report. Service revenue grew 13.2%, while Adjusted EBITDA of $2.43B grew 27% y/y despite strong promotional activity surrounding the iPhone launch. 3Q16 marked the 14th consecutive quarter of +1M net adds. Management reported that T-Mobile ONE constituted over 80% of subscriber additions.
Analyst Timothy Horan commented, "TMUS reported a strong quarter, supporting our share-gain/margin expansion thesis. T-Mobile's results indicate that the company is successfully balancing industryleading growth with increasing profitability. Service revenue grew 13.2%, while Adj. EBITDA (ex-one time gains) of $2.43B grew 27% y/y despite strong promotional activity surrounding the iPhone launch. Network quality continues to improve with both the rollout of low bandwidth spectrum and greater penetration of band 12 compatible handsets and drove the lowest third quarter postpaid churn in company history of 1.32% (aided by the offloading of Walmart Family plans). We believe leverage from growing revenues and network synergies will drive further margin improvements, we have raised our EBITDA estimates by 2%, and price target to $55 from $48 on 6.5x 2018E Cash EBITDA."
Shares of T-Mobile US, closed at $51.19 yesterday.
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