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Should Investors Buy or Sell T-Mobile Stock?

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T-Mobile (NYSE:TMUS) stock rose 0.76% in today’s trading session at 9:57 AM ET. The stock rose after the company reported its earnings for the fourth quarter of 2019 after the market bell on Thursday. T-Mobile beat analysts’ earnings and revenue estimates in the fourth quarter of 2019. The company’s adjusted EPS rose 16% YoY (year-over-year) to $0.87 in the fourth quarter of 2019, which beat analysts’ estimate of $0.83.

In the fourth quarter of 2019, T-Mobile reported revenue of $11.88 billion—3.8% growth from $11.45 billion in the fourth quarter of 2018. The company beat analysts’ consensus revenue expectation of $11.83 billion. T-Mobile’s revenue was boosted by its wireless service revenue, which rose 6.3% YoY to $8.7 billion from $8.2 billion due to its postpaid revenue rising 8.1%.

T-Mobile’s customer growth

In the fourth quarter, T-Mobile gained 1.31 million net postpaid customers, which includes 1.0 million postpaid phone customer net additions. The postpaid phone net additions were in line with analysts’ expectations. The company also added 77,000 prepaid net customers.

T-Mobile reported a postpaid phone churn rate of 1.01% in the fourth quarter, which was higher than its churn rate of 0.99% in the fourth quarter of 2018.

In comparison, AT&T (NYSE:T) gained 229,000 postpaid phone net customers in the fourth quarter, while Sprint (NYSE:S) lost a net of 115,000 postpaid phone customers.

Latest merger news

T-Mobile investors have been awaiting more important news. They want to know whether the Sprint and T-Mobile merger deal gets approval from Federal Judge Victor Marrero. The proposed $26.5 billion merger deal faces a lawsuit filed by multiple states seeking to block the deal. The states argue that the combination is anticompetitive and would lead to higher prices for consumers.

According to a Reuters report, “T-Mobile maintained in closing arguments last month that customers will benefit from having access to cheap, fast wireless speeds and that buying Sprint presents the best option for buying compatible spectrum needed to expand its 5G network.” The report also said, “We’re awaiting the judge’s verdict and we remain confident in a positive outcome,” according to T-Mobile CEO John Legere.

The Department of Justice conditionally approved T-Mobile and Sprint’s merger deal. The two telecom companies agreed to sell some wireless assets to satellite TV company Dish Network (NASDAQ:DISH). Dish is expected to be the fourth-largest wireless carrier after the merger deal goes through. The deal is also supported by the FCC.

To learn more about the merger deal, read T-Mobile and Sprint Merger Looks Less Likely.

Analysts’ recommendations for T-Mobile

Among the 22 analysts tracking T-Mobile, 17 recommend a “buy”—unchanged from the last month. Five analysts recommend a “hold”—unchanged from the previous month. None of the analysts rate T-Mobile stock as a “sell.” Analysts have an average target price of $92.26 on T-Mobile. The target price implies a premium of 11.5% based on the closing price of $82.77 on Thursday.

There were several 12-month target price increases for T-Mobile stock after the company’s fourth-quarter earnings announcement on Thursday. Keybanc raised its target price from $90 to $99, while Cowen and Company raised its target price from $96 to $105. SunTrust Robinson raised its target price from $95 to $100, while Citigroup raised its target price from $93 to $101.

Stock performance

T-Mobile stock rose 1.20% on Thursday and closed the trading session at $82.77. Notably, the stock was trading 2.9% below its 52-week high of $85.22 and 23.6% above its 52-week low of $66.95. At the closing price on Thursday, T-Mobile had a market cap of $70.8 billion.

Based on the closing price on Thursday, T-Mobile stock was trading 2.3% above its 20-day moving average of $80.92. The stock is also trading 5.1% above its 50-day moving average of $78.76 and 4.5% above its 100-day moving average of $79.23.

T-Mobile’s 14-day relative strength index score is 62, which suggests that the stock is approaching the overbought zone.

On a year-to-date basis on Thursday, the stock has risen 5.6%. In comparison, Sprint and AT&T have returned -9.6% and -1.6%, respectively, year-to-date.

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