By Senad Karaahmetovic
Shares of T-Mobile US (NASDAQ:TMUS) are up about 2% in premarket trading Friday after the company yesterday announced its Board of Directors has authorized a stock repurchase program for up to $14 billion of the company’s common stock, through September 30, 2023.
Street analysts weighed in positively on the announcement with KeyBanc analysts seeing it as a “significant positive.”
“While this was highly anticipated, we believe this is likely to be viewed as a significant positive for TMUS,” analysts wrote in a client note.
A Raymond James analyst raised the price target to $178 from $175 to reflect this positive update.
“The Free Cash Flow (FCF) ramp remains extremely compelling, with company guidance of a 45% CAGR from 2021-2024, and with ~1/3 of the current market cap potentially being bought back in the next ~3 years starting now, the value creation for shareholders is quite attractive (and it seems the company agrees),” the analyst wrote in a note.
An Oppenheimer analyst argues that the announced TMUS stock buyback plan is “sustainable,” and could eventually increase to $20 billion in 2025 and 2026.
“Buying back from the public float will likely be material, as about half of TMUS' shares are owned by Deutsche Telekom. With repurchases in the $14–20B range, TMUS can buy back 15–20% of its float per year,” he added.