Wall Street Reacts To Sprint, T-Mobile Merger

The big news on Wall Street on Monday is the official merger agreement between T-Mobile Us Inc TMUS and Sprint Corp S announced over the weekend.

Here’s a look at what Wall Street has to say about the deal.

Voices From The Street

Wells Fargo analyst Jennifer Fritzsche is on the sidelines on both stocks until the regulator picture becomes clearer.

“That said, we will be very clear that if TMUS gets this done – it would be in an extremely strong position in our view – with deep spectrum assets, a well perceived brand and a management team that has successfully integrated past acquisitions,” Fritzsche wrote in a note.

Morgan Stanley analyst Simon Flannery said T-Mobile may be forced to make major concessions if the company wants the deal to be approved.

“The merger presentation focused on the ability of the combined companies to aggressively pursue 5G leadership,as well as a commitment to increase US jobs, but did not include any commitments to divest spectrum or help to support cable companies or other potential new entrants,” Flannery said.

William Blair analyst Jim Breen said T-Mobile’s timeline to close the deal in the first half of 2019 is optimistic.

“That timeline could get pushed out, in our view, given several transactions in the media and telecom segment currently under review by regulators,” Breen said.

Bank of America analyst David Barden said even if the deal is approved, its synergy benefits won’t start kicking in for at least three to four years.

“As a result of the announcement, we move to No Rating on TMUS as we expect it will no longer trade on fundamentals but rather regulatory approval probabilities,” Barden said.

Ratings And Targets

Wells Fargo has a Market Perform rating and $6.25 target for Sprint and a Market Perform and $68 target for T-Mobile.

William Blair has an Outperform rating for T-Mobile and an Underperform rating for Sprint.

Sprint closed Monday at $5.60, down 13.7 percent, while T-Mobile closed down 6.1 percent at $60.56.

Related Links:

Sprint And T-Mobile To Merge In $26 Billion Deal: What You Need To Know

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Image credit: Mike Mozart, Flickr