T-Mobile (TMUS) and Sprint (S) fell after CNBC tweeted this morning, “If the parties do not settle next week, the Justice Dept. would sue to block the merger, sources say. But optimism remains that the parties could settle.” At 2:31 PM ET, T-Mobile stock was trading at $77.67 with a 1.6% loss for the day, while Sprint was trading at $6.89 with a 2.8% loss. AT&T (T) was also down 0.5%.

In June, a group of US state attorneys general filed a suit to block the proposed T-Mobile–Sprint merger deal on antitrust concerns. The lawsuit alleges that the merger could harm competition and raise costs for consumers. To win over the US Department of Justice, the companies are discussing the divestiture of wireless spectrum and prepaid brands to create a viable fourth wireless competitor if the merger deal goes through.

Shareholder returns and stock trends

On Wednesday, T-Mobile’s closing price was $78.93 per share. The stock was trading 36.3% above its 52-week low of $57.89 and 2.5% below its 52-week high of $80.93. T-Mobile stock has risen 0.4% in the last five trading days, 4.9% in the trailing-one-month period, and 29.0% in the trailing-12-month period. T-Mobile and Sprint are up 24.1% and 21.8%, respectively, year-to-date.

Currently, T-Mobile’s market cap is $67.4 billion. It’s the third-largest US national wireless carrier in terms of market cap. AT&T’s market cap is $242.7 billion, and Sprint’s market cap is $28.9 billion.

Analysts’ recommendations

On Wednesday, most analysts had “buys” on T-Mobile stock. Eighteen of the 21 analysts that follow the stock are in favor of “buy” ratings, and three are in favor of “holds.” No analysts call the stock a “sell.” On average, analysts have given T-Mobile a 12-month price target of $83.00, which implies a rise of 5.2% from its closing price of $78.93 on Wednesday.

T-Mobile’s valuation

Currently, T-Mobile is trading at a 12-month forward PE ratio of 18.10x. It’s trading at 20.04x analysts’ 2019 adjusted EPS estimate of $3.94 and 16.93x analysts’ 2020 adjusted EPS estimate of $4.66. Analysts expect T-Mobile’s adjusted EPS to rise 17.3% in 2019 and 18.3% in 2020. They also expect the company’s earnings to rise at a compound annual growth rate of 16.6% in the next five years.

Analysts expect T-Mobile to report adjusted EPS of $0.97 on revenue of $11.1 billion in the second quarter. To learn more, read What We Can Expect from T-Mobile’s Q2 Results.

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