T-Mobile rises as KeyBanc upgrades on 'best-in-class 5G network,' rising margins
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T-Mobile (NASDAQ:TMUS) shares rose early Wednesday after KeyBanc Capital Markets upgraded the telecom provider, noting it has several positives going for it, including a "best-in-class 5G network."
Analyst Brandon Nispel upgraded the stock to overweight and put a $155 price target on it, noting that since the firm downgraded the stock in August 2021, many of their concerns were "alleviated." 
"Our August downgrade was based on the view that competition in wireless was increasing, expectations for growth were high, and valuation represented too substantial of a premium," Nispel wrote in a note to clients. "While we still see the wireless market as increasingly competitive from Cable, we believe [T-Mobile] should continue to take substantially more share than AT&T (NYSE:T) and Verizon (NYSE:VZ)." 
T-Mobile (TMUS) shares were up slightly more than 0.5% to $126.40 in premarket trading on Wednesday.
In addition to the strong 5G network, Nispel mentioned T-Mobile (TMUS) has growing margins, "material" free cash flow generation from the Sprint acquisition, a growing EBITDA profile and it's trading at a "reasonable valuation."
Concerning T-Mobile's network, Nispel said it is leading both AT&T (T) and Verizon (VZ) in 5G performance and availability, and it's likely that the lead is sustainable in the near-term because of available spectrum depth and coverage target for both companies.
T-Mobile (TMUS) could see as much as $7.5 billion in synergies from the Sprint deal and with merger-related costs declining, it's possible that services margins could surpass 50% by 2025. When added to the decline in spending in 2023 and beyond, T-Mobile could buy back up to $60 billion in stock between 2023 and 2025.
Last week, T-Mobile (TMUS) expanded its wholesale partnership with Sierra Wireless, letting Sierra Wireless' customers tap T-Mobile's 5G.