By Senad Karaahmetovic
Shares of T-Mobile (NASDAQ:TMUS) are trading 2.5% higher in pre-open trading after the telecom giant reported better-than-expected Q3 results.
T-Mobile reported an EPS of $0.40 on revenue of $19.48 billion, which compares to the consensus that called for an EPS of $0.39 on sales of $20.02 billion. The company reported an increase of 1.73 million in total net customers, beating the consensus by well over 200,000. Postpaid net customers also topped analyst estimates.
For the full year, TMUS guided to adjusted Ebitda between $26.2 billion and $26.4 billion, up from $26 billion to $26.3 billion. The company expects to add 6.3 million postpaid net customers, in-line with the consensus. TMUS also raised its forecast for full-year free cash flow and capex.
The company also raised the Sprint merger synergies guidance range to $5.7-5.8 billion in 2022.
Raymond James analysts lowered the price target to $175 from $178 and said the results show there are “no macro dark nights for TMUS.”
“T-Mobile has a 5G head start (~250M mid-band 5G Pops vs. the next most at VZ with ~160M) that we think will continue to drive subscriber and service revenue growth, even with potential additional churn as finish migrating Sprint subs to the full Magenta experience. The integration is already producing synergies that are improving margins, VFCF/share (which we think should more than triple from 2022-2024), and shareholder returns (e.g., potentially ~$60B of stock buybacks from 3Q22-YE25 vs. ~$180B market cap),” they said in a client note.
“Subs on fire,” is how RBC analysts reflected on T-Mobile’s Q3 earnings report.
“While TMUS remains crowded, we believe its network and value leadership combined with numerous share gain avenues position it as both having the most credible growth outlook as well as being the most defensive name in our coverage. TMUS remains our top pick across telco/cable.”