T-Mobile US (NASDAQ: TMUS) reported better-than-expected first-quarter earnings on Thursday, but its slower-than-anticipated growth in core wireless phone subscribers weighed on investor sentiment, with shares tumbling 6.4% in premarket trading on Friday.
FactSet reports that the company’s adjusted earnings per share of $2.58 on revenues of $20,9 billion exceeded analyst estimates of $2.47 and $20,6 billion.
The wireless giant reported $2 earnings per share on revenues of $19.6 billion a year ago.
Gains in high-speed Internet subscribers offset the loss of phone subscribers
T-Mobile has added 1,34 million net postpaid customers in the last quarter. This is above Wall Street’s estimate of just 1.18 million.
A large part of this growth is due to the increase in users who use high-speed Internet.
The number of postpaid customers, which is a key metric to watch, was below expectations.
Analysts had predicted 504,900 new hires. The actual number was 495,000, down from the 532,000 that the company announced in the previous quarter.
T-Mobile has reaffirmed that despite the current slowdown it expects to add between 5.5 and 6 million net postpaid customers by 2025.
It was also announced that the company’s upcoming satellite service will be $10 per month. This is seen as an added value in a market with increasing competition.
Analysts flagging valuation risk
T-Mobile’s broker opinion remains positive, with the majority of firms rating it as a “buy” or a “strong buy”. Ten have a rating of ‘hold’, while one has a rating that reads’sell.’
According to data compiled from LSEG, the median price target is $275. Some analysts are concerned about the valuation of this stock in comparison to other stocks.
RBC Capital Markets maintains an “sector-perform” rating and a target of $265. They said T-Mobile should be able to meet its subscriber goals despite the macroeconomic downturns.
It noted that the enterprise value to earnings ratio of the company for the fiscal year 2026 is 11.09, which is well above the median industry figure of 6.56.
Moffett-Nathanson has a rating of neutral and set a price target at $220. The stock is overvalued but appears to be immune from trade tensions.
The industry also stated that the trend of postpaid subscribers leaving was a general one.
Oppenheimer rates T-Mobile’s stock as “outperform”, with a target of $300. It is still the company it favors most in the wireless telecom sector.
It said that the 5G network of the company and the recent stock buybacks were the keys to its stock performance.
NewStreet Research rates T-Mobile’s stock as “buy” with a price target of $308. The company is “best-positioned” to compete in an increasingly competitive market, given its lower revenue per unit, higher capacity and strong momentum.
T-Mobile is confident about its growth despite economic uncertainty.
These results follow mixed earnings from Verizon and AT&T earlier in the week.
Verizon reported higher than expected losses in the postpaid telephone subscriber segment, but beat estimates for profit.
AT&T exceeded expectations in terms of new customers and even posted a small gain.
New Street Research analysts stated that “T-Mobile, in addition to having an advantage on capacity and share growth due to its strong potential for EBITDA gains by competing with AT&T or Verizon’s price,” has more opportunities to grow EBITDA by matching their prices.
Telecom companies are preparing for the possible consequences of Trump’s trade tariffs against US trading partners.
The prospect of future levies has added uncertainty to the situation.
Experts warn that consumers may also delay upgrading their phones or choose cheaper plans due to inflation and uncertainty in the economy.
Peter Osvaldik, CFO of T-Mobile told Barron’s that “connection is a fundamental aspect in people’s daily lives”. He said that the industry had not only survived but also continued to grow.
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