On Wednesday, in a research note T-Mobile US Inc. third quarter FY15 earnings release was reviewed by Pacific Crest. The sell side firm reiterated a target price of $47 along with an Overweight rating and believes that the company reported strong results for the quarter ended on September 30. The firm told the stock is a buy on weakness.
The revenue for the company came in at $7.85 billion and was unable to beat the $8.31 billion mark estimated by the analysts, because of lower revenue from equipment caused by T-Mobile’s JUMP on Demand leasing program. Pacific Crest also noted that the average revenue per unit also dell year over year and is expected to be a concern for investors. However, low average revenue per unit caused from promotions and on the contrary improved average revenue per account 4.8% year over year.
The telecom company also increased its postpaid subscriber estimates to 3.8 to 4.2 million, similar to the sell side firm expectations, but shareholders were supposing more as strength in broadband remains to indicate a stoppage in addition to postpaid subscribers. The company continues to put its investment in network aggressively, which can be seen by the coverage of its LTE network now at around 300 million PoPs and the disposition of its 700 MHz A Block spectrum, which is most likely to cover around 350 markets by the end of current year.
The firm thinks that offering a broad and reliable network is significant for complying with the requirements of the customers. The firm also believes that the company’s development should cause greater addition in customers and enhanced churn in the upcoming period. The sell side firm believes that the shareholders reaction to lower average revenue per unit and marginally fewer additions in postpaid is overdone as the T-Mobil stock closed in red by 5.7% after the announcement of the quarterly earnings. The firm still expects the company to report robust additions in postpaid next year, which might continue to be caused by Un-Carrier initiatives.
John Legere, T-Mobile Chief Executive Officer said during the earnings announcement. "We've had 10 quarters in a row with over 1 million net new customers. Our momentum is strong and our incredible customer growth is translating directly into solid financial growth which makes it crystal clear that putting customers first is just good business."
T-Mobile stock news reveals that the stock closed down at $39.31 after going green by 0.74% on Wednesday October 28.
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