Can T-Mobile Shares Keep Heading Higher?


After a remarkable 42% rise in share price since the beginning of the year, T-Mobile US Inc. (TMUS) has seen its stock reach all-time highs.On October 25, analysts at Raymond James downgraded the company’s rating from “Outperform” to “Market Perform.”Despite T-Mobile’s strong execution following its merger with Sprint—which improved market positioning and expanded margins—the firm expressed concerns about the stock’s rapid appreciation.The share price has already surpassed Raymond James’s year-end 2025 target of $221, leading them to question the sustainability of its current valuation amid potential company, industry, and macroeconomic risks. Robust third-quarter earnings and raised guidanceT-Mobile’s third-quarter results exceeded expectations, showcasing strong financial health.The company reported a net income of $3.06 billion, or $2.61 per share, beating the average analyst estimate of $2.43.Revenue increased nearly 5% year-over-year to $20.16 billion, surpassing the consensus estimate of $20.01 billion.In light of these results, T-Mobile raised its full-year guidance across the board.It now anticipates postpaid net customer additions between 5.6 million and 5.8 million, up from the previous range of 5.4 million to 5.7 million.Adjusted free cash flow projections were also increased to between $16.7 billion and $17.0 billion. Expanding customer base and strategic partnershipsThe third quarter saw T-Mobile adding 1.6 million postpaid net customers, boosting its total customer count to 127.5 million from 117.9 million the previous year.This growth outpaces major rivals like AT&T and Verizon, solidifying T-Mobile’s position as an industry leader in subscriber additions.The company is also investing in innovative technologies, partnering with OpenAI to develop IntentCX, an AI-driven customer service platform, and collaborating with Nvidia to create an AI RAN Innovation Center.These initiatives aim to enhance customer experience and optimize network performance, potentially reducing operational costs and opening new revenue streams. Business fundamentals and competitive edgeT-Mobile’s strong fundamentals are evident in its continuous growth and market share gains.The successful integration of Sprint has not only expanded its customer base but also improved operational efficiencies and margins.The company’s focus on its 5G network rollout and lower capital expenditures—projected between $8.8 billion and $9.0 billion—give it a competitive advantage over peers.With an expected adjusted EBITDA between $31.6 billion and $31.8 billion, T-Mobile demonstrates robust profitability and cash flow generation. Valuation metrics and analyst perspectivesDespite the positive financial outlook, some analysts caution about T-Mobile’s valuation metrics.The stock’s rapid climb has led to a free cash flow yield of approximately 7%, lower than those of its major competitors.This has raised concerns about whether the premium valuation is justified without continued accelerated growth.Additionally, analysts at Raymond James noted the company’s slower-than-expected share buybacks, suggesting that management might be exercising caution due to the elevated stock price.With the fundamental landscape outlined, the focus turns to how T-Mobile’s stock may perform in the coming months.An examination of the technical aspects will provide further insights into whether the shares can maintain their upward momentum or if a consolidation phase is on the horizon. Short-term weakness emergesAfter its rapid ascent this year, T-Mobile’s stock has finally hit a minor wall near $235.Whether this emerges as a medium-term resistance remains to be seen. Source: TradingViewTherefore, investors with a bullish outlook on the stock must remain cautious and refrain from opening fresh long positions unless it gives a daily closing above $235.Traders with a bearish outlook have a low-risk entry on their hands right now.They can short the stock at current levels near $228 with a stop loss at $236.3.If this short-term weakness turns into a medium-term weakness, the stock can fall to its support levels near $192, where one can book profits.More By This Author:Gold And Copper Slip As Dollar Firms; Palladium Extends Gains S&P 500, Nasdaq Rise Sharply Ending 3-Day Losing Streak; Viking Therapeutics Surge, While Capri’s Shares Slump Applied Materials Stock: Here Comes The Death Cross

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