T-Mobile US (TMUS) is among the leading telecom operators in the U.S. It acquired its rival Sprint in 2020, and the integration is continuing. Let’s take a look at T-Mobile’s latest financial performance and risk factors.
T-Mobile’s Q2 Financial Results and 2021 Outlook
The company released its second-quarter financial results on July 29. Revenue increased 13% year-over-year to $20 billion, boosted by significant customer acquisition, as postpaid net additions in the quarter hit 1.3 million. The company closed the quarter with a record 104.8 million customers.
T-Mobile revealed that one-third of Sprint customers have transitioned to its network. Markedly, net income increased eight times from a year ago to $978 million, boosted by realized synergies and growth in Services revenue.
Based on strong execution, T-Mobile now expects cost savings from the merger with Sprint to be in the range of $2.9–$3.2 billion in 2021. It previously estimated merger synergies in the range of $2.8–$3.1 billion.
For full-year 2021, the company now anticipates postpaid net customer additions to come in the range of 5–5.3 million, up from the prior guidance range of 4.4–4.9 million. (See T-Mobile stock charts on TipRanks).
T-Mobile’s Risk Factors
According to the new TipRanks Risk Factors tool, 32 risk factors have been identified for T-Mobile. The top risk factor category is Finance and Corporate, accounting for 47% of the total risks. Legal and Regulatory, and Tech and Innovation are the next two major risk categories at 22% and 13%, respectively.
Since June, T-Mobile has revised its risk profile to add one new risk factor under Finance and Corporate. It has also changed the wording of an earlier disclosed risk factor in the same category.
A newly added risk factor regards the potential consequences of T-Mobile choosing Court of Chancery in Delaware as the exclusive forum for certain disputes. It notes that the choice of the forum may discourage some stockholders from bringing up lawsuits against the company or its executives.
However, T-Mobile tells investors that the additional costs from fighting legal battles outside its preferred jurisdiction could adversely impact its business and financial condition.
On the changed risk, the company has expanded the wording of a risk factor about the Sprint merger to stress that integrating Sprint’s business may be more difficult or expensive than expected.
T-Mobile’s Finance and Corporate risk factor is above the sector average at 47% versus 38%. T-Mobile’s shares have gained about 8% since the beginning of 2021.
Analysts’ Take
Morgan Stanley analyst Simon Flannery on Wednesday reiterated a Buy rating on T-Mobile stock and raised the price target to $148 from $146. Flannery’s new price target suggests 4.1% upside potential.
“T-Mobile remains on a strong footing and should benefit from increased switching activity in 2H,” commented Flannery.
Consensus among analysts is a Strong Buy based on 14 Buys and two Holds. The average T-Mobile price target of $164.40 implies 15.6% upside potential to current levels.
Related News:
Kraft Heinz Reports Quarterly Beat; Shares Fall 5%
Roku Plunges 8.6% After-Hours Despite Exceptional Q2 Results
HubSpot Reports Robust Q2 Results and CEO Transition; Shares Pop
