T-Mobile US, Inc. (NASDAQ: TMUS) shares have advanced from $85 above $140 since May 2020, and the current price stands around $139. Deutsche Bank has raised its price target on T-Mobile US from $155 to $185 while J.P. Morgan sees its shares as a short-term pick.
Fundamental analysis: J.P. Morgan sees T-Mobile shares as a short-term pick
T-Mobile US is an American wireless network operator, but its largest shareholder is the German telecommunications company Deutsche Telekom with a 43% share. T-Mobile US is a stable company that has entered aggressively into the Home Internet segment, and it has plans to cover more than 50% of US households within six years.
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T-Mobile US reported better than expected first-quarter results this month; total revenue has increased by 78.4% Y/Y to $19.8 billion, while the GAAP EPS was $0.74 (beats by $0.18). It is important to say that the adjusted EBITDA was $6.9 billion in the first quarter of 2021, while the net cash provided by operating activities was $3.7 billion.
Total revenue has increased above expectations (beats by $880 million), and the company raised its outlook for the 2021 fiscal year. The higher revenue was due to the merger with Sprint (the Sprint merger closed April 1, 2020), but J.P. Morgan sees T-Mobile shares as a short-term pick.
“T-Mobile US is still a short-term pick, there’s “ample opportunity for growth in fixed wireless, enterprise and rural markets, and the company highlighted $60 billion of buyback potential from 2023-2025,†J.P. Morgan reported.
Deutsche Bank has raised its price target on T-Mobile US from $155 to $185 on expectations that the company will continue to create value through its takeover of Sprint. It is also important to mention that Warren Buffett’s Berkshire Hathaway has shares of this company in its portfolio (5.24 million shares).
Despite this, the current risk/reward ratio is not good enough for “value†investors, lots of positive expectations have already been included in the stock price, and probably it is not the best moment to invest in T-Mobile US shares.
If the US stock market enters a more significant correction phase, the share price could be at much lower levels, the book value per share is around $53, and the company does not pay dividends. If we compare the total stockholders’ equity of $66.37 billion and the market capitalization of $171 billion, we can notice that this stock is not undervalued.
Technical analysis: T-Mobile US shares continue to trade in a bull market
On this chart, I marked important resistance and support levels. The important support levels are $130, and $120, $150, and $160 represent the resistance levels. If the price jumps above $145, the next target price could be $150 or even $160.
Rising above $160 supports the continuation of the bullish trend; still, if the price falls below $130, it would be a “sell†signal, and we have the open way to a $120 support level.
Summary
T-Mobile US shares continue to trade in a bull market after the company reported better than expected first-quarter results this month. Deutsche Bank has raised its price target on T-Mobile US from $155 to $185 while J.P. Morgan sees its shares as a short-term pick. According to technical analysis, there is no risk of a positive trend reversal, but it is probably not the best moment to invest in T-Mobile US shares.
