What the Delay in T-Mobile's $60B Shareholder Return Means for Investors: Expert Opinions from Analysts

Raymond James analyst Ric Prentiss maintained T-Mobile US TMUS with a Strong Buy and lowered the price target from $184 to $172.

The analyst updated his model for the company's announced shareholder remuneration plans. 

The shareholder return plans of $19 billion between 4Q23 and year-end 2024 ($3.75 billion in dividends, the remainder in stock buybacks) are coming in lighter than he had been modeling ($27 billion only consisting of buybacks). 

The previously guided $60 billion of total shareholder returns will come late (early 2026 vs. by year-end 2025). 

So his lowered price target reflects a higher share count, but also note that the total shareholder return is no longer reflected solely by the price target and now includes a nearly 2% dividend yield. 

Citi analyst Michael Rollins maintained a Buy rating on T Mobile US with a price target of $176.

T-Mobile provided an update at an investor conference on its capital plan, while commentary supports high-level financial performance and is tracking with its guidance for 2023 and 2024. 

T-Mobile disclosed a plan to return an incremental $19 billion between 4Q23 and year-end 2024, although this amount fell below Rollins' prior estimate and VA consensus of ~$22 billion.

The capital plan now includes a dividend sooner than he anticipated. 

The pacing of capital returns to reach the previously guided up to $60 billion could spill over from year-end 2025 into early 2026 as TMUS has tightened its leverage target to ≤2.5x and has committed to strategic investments of ~$5 billion. 

The pacing of capital returns represents a moderate step back to cash repatriation expectations. At the same time, he believes initiating a quarterly dividend and affirmed financial trajectory can help broaden investor interest. 

Price Action: TMUS shares traded higher by 0.79% at $138.36 on the last check Friday.