T-Mobile gains 4% on still-strong subscriber growth, lower churn
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T-Mobile stock (NASDAQ:TMUS) is 4.4% higher, among the S&P 500's top gainers today after the carrier beat profit expectations in the first quarter and again led the industry in growth.
The company logged earnings per share of 57 cents, down 23% year-over-year but well over estimates for 37 cents per share, and revenues rose by about 2% to $20.1 billion.
Industry-leading subscriber growth again topped expectations, though. Postpaid net customer additions came to 1.3 million, the company's best first quarter in eight years, and postpaid net account additions were a record 348,000.
Postpaid phone net adds came to 589,000. With the Big Three carriers in the books, those 589,000 adds compared to a loss of 36,000 at Verizon and net postpaid phone adds of 691,000 at AT&T.
Churn was strongly lower - down 5 basis points year-over-year to 0.93% - a result praised by Evercore ISI analyst Vijay Jayant, who noted "it's better to keep 'em than to have to win 'em back."
That lower churn translates to 210,000 fewer disconnects, which more than offsets a 120,000 shortfall in gross adds, Jayant notes. Evercore has an Outperform rating and price target of $170, now implying 30% upside.
The report reinforces prospects for T-Mobile to "grow revenues, meaningfully improve margins and create financial flexibility for future share repurchases," Citi says; it has a $156 target.
T-Mobile also again raised expectations for merger synergies, to a range of $5.2 billion-$5.4 billion in 2022.
Recently, parent Deutsche Telekom raised its stake in T-Mobile by buying shares from SoftBank.