KeyBanc downgrades T-Mobile on valuation concerns

Investing.com -- KeyBanc downgraded T-Mobile US Inc (NASDAQ: TMUS) to “sector weight” from “overweight,” citing stretched valuation and concerns over the company’s growth trajectory in a shifting competitive landscape.

The brokerage noted T-Mobile's leadership in wireless market share over the past decade and the accretive nature of its FWA business. However, it flagged the expansion into fiber through acquisitions, which involve high multiples with unproven returns.

“The competitive environment feels as if it is shifting toward a converged offering, where T-Mobile is making acquisitions in Fiber business at significant multiples that have yet to be proven,” KeyBanc said

T-Mobile has given a guidance of around 5% EBITDA growth in 2025, a slowdown from 9% in 2024. KeyBanc noted potential upside to the guidance but said the deceleration contrasts with AT&T’s mobility EBITDA growth forecast of 3-4%.

KeyBanc did not raise its price target, as the valuation limits further upside at current levels.

“With TMUS's valuation at a premium and growth expected to slow, we end up looking for better relative value. In that regard, we think AT&T’s growth appears relatively attractive,” analyst added.

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