T-Mobile Raises 2021 Guidance After Strong Q1 Earnings

T-Mobile (TMUS) expects to deliver even better results in 2021 than it previously anticipated. The telecom operator has raised its full-year outlook after reporting strong Q1 earnings. T-Mobile merged with rival Sprint to expand its business. Given the strength of the execution of the merger, synergies are projected to more than double the $1.3 billion delivered in 2020. The wireless operator also sees its customer gains accelerating. It added 1.2 million postpaid subscribers in the first quarter, which it said was the industry’s best performance. It now expects to add 4.4 million – 4.9 million postpaid subscribers in 2021. That’s higher than the 4 million – 4.7 million postpaid subscriber gain it previously forecast. Additionally, the company lifted its free cash flow target to $5.1 billion – $5.5 billion, up from $4.9 billion – $5.4 billion previously. Revenue rose to $19.8 billion from $11.1 billion a year ago. EPS of $0.74 was down from $1.10 as the Sprint merger added more shares. T-Mobile credits its gains to network investment, especially 5G. “We just keep pushing further ahead of the competition. Our network leadership is fueling customer momentum, delivering merger synergies and expanding our addressable markets for growth,” said T-Mobile CEO Mike Sievert. The integration of Sprint is progressing well. T-Mobile reported that Sprint customer traffic now running on its network has doubled from the previous quarter to 50%. It also disclosed that 20% of Sprint customers have shifted to its network. (See T-Mobile stock analysis on TipRanks) Oppenheimer analyst Timothy Horan reiterated a Buy rating and set a $190 price target on the stock after the strong earnings and guidance boost. It indicates upside potential of 41.98% “TMUS is executing very well and is ahead of its competition on network builds,” commented Horan. Consensus among analysts is a Strong Buy based on the stock’s 12 Buy and 1 Hold ratings. The average analyst price target of $160.08 implies 19% upside potential from the current price. TMUS scores a “Perfect 10” on TipRanks’ Smart Score rating tool, implying it is likely to outperform the market.
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