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T-Mobile (TMUS) Earnings Preview

by | Jul 29, 2021

T-Mobile (TMUS) reporting earnings tonight after the close with the Street looking for $0.50 on $19.35B in sales. Next quarter is guided to $0.54/$19.82B and the FY is $2.21/$79.82B, a 16.7% increase Y/Y. Shares have a strong history closing higher in 10 of the last 12 reports. The average closing move has been 4.4% and the max move was 10.05%. The current implied move is 3.4%. Options flow has been bullish also with a buyer in the September $150 calls on 7/20 and more than 7,500 August $150 calls in open interest from buyers. TMUS is not far from new highs and pulled back to the 55-MA and cloud support where shares are carving out a small base. A move back to the $150 level has room to run above with a measured move to $157. MACD has reset back around zero and RSI is around 50. The $181.5B company trades 43.75X earnings, 2.36X sales, and 27X cash. TMUS remains the gold-standard within the telecom space and should continue to show momentum in postpaid adds as their network remains robust. TMUS has upside from continued merger synergies as well while the 5G cycle is still in the early innings and expanding their market for growth. Analysts have an average target for shares of $158.50 and a Street High $190. Keybanc out last week expecting slightly below consensus postpaid phone net additions, though the analyst continues to see T-Mobile as best positioned to grow and take share in wireless. While the market appears to be giving the company credit for continued market share gains, and new market expansion, the long-term catalyst remains the start of meaningful share repurchases. SocGen positive on 7/16 citing their strong pricing power and the ability to tap significant scale synergies to boost margins. Hedge fund ownership rose 4% in Q1. Viking Global a buyer of stock and now over 10M shares. D1 Capital adding a new 4.7M share position.

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