T-Mobile: Market Share Gains Continue, Time To Talk M&A?

T-Mobile US Inc TMUS's first-quarter earnings report showed that the wireless company continues to gain in size, begging the question: Will the company be bought out by a larger telecom, media or technology company?

Baird's William Power commented in a research report on Tuesday that T-Mobile added 798,000 postpaid subscribers, which exceeded his 706,619 estimate. The strong growth shows that the company is "dominating" the industry, although this is to be expected.

Power further noted that while T-Mobile's reported revenue was in line with estimates, it did grow 11 percent year-over-year as opposed to its peers including AT&T Inc. T and Verizon Communications Inc. VZ, which both reported service revenue declines.

M&A Talk

T-Mobile's management reaffirmed prior comments that horizontal and vertical mergers have some logic but management remains positive it will remain a stand-alone company. Nevertheless, the analyst believes the stock's valuation is "likely to be driven increasingly by M&A."

If the company were to be acquired, the analyst suggested an offer may come from Comcast Corporation CMCSA and Charter Communications, Inc. CHTR or others.

Bottom line, the analyst remains "constructive" on the company's strong operating results and improving financials, but the stock's valuation is already trading above industry averages.

Shares remain Neutral rated with a price target boosted from $64 to $68.

Related Links:

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