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Why T-Mobile and Sprint Shares Are Falling Today


Oct. 2 2019, Published 3:40 p.m. ET

T-Mobile (TMUS) and Sprint (S) shares fell in premarket trading today. As this article was written, T-Mobile stock was down 2.76% at $76.04, while Sprint was down 3.33% at $5.96. AT&T (T) stock was also down 1.06% at $37.00. The Dow Jones Industrial Average dropped more than 1.99%. Plus, the S&P 500 and Nasdaq Composite were down about 1.92% and 1.72%, respectively.

Telecom stocks fell after news reports indicated a recession in the US economy. Investors’ worries increased on the release of the Institute for Supply Management’s PMI (purchasing managers’ index) data.

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T-Mobile and Sprint merger: Still on hold

The proposed $26.5 billion merger deal between T-Mobile and Sprint is still pending. Eighteen states have sued to stop the combination due to antitrust issues. These states’ attorneys general argue that the merger could harm competition, and consumers might have to pay more for wireless services. A court hearing is slated to begin in December.

Earlier this year, the Department of Justice approved the merger on the condition that both companies would divest some wireless assets to Dish Network. However, T-Mobile has paused some of its mobile 5G network rollout efforts amid the uncertainty surrounding the merger’s approval.

TMUS: Stock performance

On Tuesday, T-Mobile’s closing price was $78.20 per share. The stock was trading 30.42% higher than its 52-week low of $59.96 and 8.24% lower than its 52-week high of $85.22.

T-Mobile stock has fallen 1.5% in the last five trading days. However, TMUS stock has risen 0.2% in the trailing-one-month period, and it has risen 11.3% in the trailing-12-month period. T-Mobile and Sprint are up 22.9% and 5.8%, respectively, year-to-date.

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Analysts’ recommendations on T-Mobile

Despite the recent fall, analysts still look bullish on T-Mobile. Twenty analysts covered T-Mobile stock on Tuesday. Among these analysts, six recommended a “strong buy,” 10 recommended a “buy,” and four recommended a “hold.” The stock hasn’t received any “sell” or “strong sell” ratings from these analysts.

Wall Street analysts’ mean target price on T-Mobile stock is $88.53. The target price implies a 13.2% upside from the last closing price of $78.20.

T-Mobile’s valuation

T-Mobile is trading at 19.51x analysts’ 2019 adjusted EPS estimate of $4.01. TMUS stock is trading at 16.23x analysts’ 2020 adjusted EPS estimate of $4.82.

Analysts expect T-Mobile’s adjusted EPS to rise 19.3% in 2019 and 20.2% in 2020. They also expect its earnings to rise at a CAGR (compound annual growth rate) of 18.9% in the next five years.

Analysts expect T-Mobile to report adjusted earnings of $0.96 per share on revenue of $11.32 billion in the third quarter.

Read T-Mobile and Sprint Stocks: What to Expect This Week and T-Mobile versus Sprint: Which Stock Looks Stronger? to learn more.


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