“Patience should be rewarded,” Morgan Stanley said about T-Mobile shares. The firm reinstated T-Mobile to its list of top picks in telecom services. Analyst Simon Flannery maintained his overweight rating on shares, while increasing his price target by $1 to $178. His target price implies 39% upside from where shares closed on Thursday. “T-Mobile is one of the only companies in our coverage (along with Iridium) with a sizable buyback program who is able to take advantage of market volatility. The company offers investors low leverage, strong FCF generation, a recurring revenue model, network leadership, growing market share and reasonable valuations,” Flannery wrote in a Thursday note. The analyst said the recent weakness in the telecom services sector creates an opportunity for T-Mobile to execute the rest of its $14 billion share buyback program at lower prices, “creating more value for shareholders.” Flannery noted temporary headwinds from wholesale traffic off-loading by DISH and Verizon are temporary headwinds to T-Mobile shares. The company’s ability to outperform the sector may become harder as it gains more market share, he added. Shares are down more than 8% year to date. The stock is still up 1.2% over the past 12 months. Morgan Stanley said it expects the stock “to break out of this range over the next few months driven by operating and technical factors.” The firm expects T-Mobile to continue to take share in the wireless industry while its newly-launched 5G plan supports service revenue growth. TMUS YTD mountain TMUS year to date —CNBC’s Michael Bloom contributed to this report.
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