T-Mobile: From Turnaround Story To Industry Powerhouse

T-Mobile US Inc TMUS has announced robust preliminary volume data for Q4 2016, while also announcing a series of new service plan innovations.

Argus analyst Joseph Bonner maintained a Buy rating on the company, while raising the price target from $61 to $70.

Industry Powerhouse

“Now the third-place U.S. wireless service provider, T-Mobile has evolved from a turnaround story to an industry powerhouse under CEO John Legere,” Bonner mentioned.

The analyst believes T-Mobile continues to be the best positioned carrier from a customer acquisition viewpoint, while noting that the company has made progress in reducing customer churn and taking market share from other carriers.

Bonner stated that T-Mobile continues to challenge the wireless space with its innovative service plans, the success of which is evident from competitors seeking to copy plan features or diversify into other businesses.

“The company has also begun to compete on price. Its recent disguised price cut (the elimination of taxes and fee surcharges on its bills) was likely a response to the cut-rate plans introduced by Sprint over the last year or so,” the analyst went on to say.

Bull Run

The stock has also seen a robust bull run, appreciating 47 percent through 2016, compared to a 19 percent increase in the Russell 1000.

“While much of the gain appears to be driven by the company’s strong fundamentals and rapid earnings growth, we also note that TMUS is up 16 percent since the November 8 election compared to an 8 percent increase in the Russell,” Bonner stated.

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