© Reuters. Wolfe cuts T-Mobile (TMUS) stock, raises several concerns
By Senad Karaahmetovic
T-Mobile (NASDAQ:) shares are moving lower in pre-open Tuesday after Wolfe Research analysts cut the rating to Peer Perform from the prior Outperform.
While they acknowledge that T-Mobile “remains a great story,” they outlined several concerns that imply muted performance in TMUS shares. Namely, they highlight: slowing industry subscriber growth, fading Sprint churn benefits, long-term capital needs for home Internet, a “fair but full” consensus, and downside risk in the multiple.
“Selling essential services through hundreds of billions of dollars of PP&E to hundreds of millions of customers, telecom businesses are extremely stable. And while telecom stocks feature accordingly low betas, competitive change and forward-looking valuation multiples subject telecom stocks to periods of feast and famine,” the analysts explained further in a client note.
“That incremental forecast changes can have surprisingly large impacts on relative performance is the lens through which we downgrade TMUS,” they added.
The analysts also cut their 2023 and longer-term subscriber and EBITDA forecasts to now stand below or in-line with consensus.
T-Mobile stock closed over 20% higher in 2022.
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