T-Mobile stock price target raised to $291 by TD Cowen on strong results

TD Cowen raised its price target on T-Mobile US (TMUS) to $291 from $272, maintaining a Buy rating, citing strong quarterly results, significant phone subscriber additions, and increased guidance for EBITDA and free cash flow. The firm highlighted T-Mobile's competitive advantage and a new wholesale agreement with Cable targeting small businesses as key drivers. However, analyst sentiment remains mixed, with some firms expressing valuation concerns or downgrading due to competitive pressures, while the company also faces recent political scrutiny.

Analysis

T-Mobile US (TMUS) presents a picture of strong operational execution counterbalanced by mixed analyst sentiment and valuation concerns. TD Cowen has raised its price target to $291 from $272, maintaining a Buy rating, driven by robust Q1 2025 results that featured notable phone subscriber additions and better-than-expected gains in fixed wireless and prepaid customers. This performance prompted T-Mobile to raise its full-year guidance for EBITDA, phone additions, and free cash flow, although the EBITDA increase was described as 'muted' due to planned second-half investments. The company's financial health is underscored by a current EBITDA of $32.08 billion and a gross profit margin of 63.6%. Strategically, a new wholesale agreement with a Cable provider to target the small business market is viewed as a beneficial 'win-win' scenario. However, the bullish outlook is not universal. KeyBanc downgraded the stock to Underweight, citing competitive threats from fiber infrastructure, while BofA Securities initiated with a Neutral rating, pointing to a premium valuation. Furthermore, the company faces political scrutiny from House Democrats over a business partnership, introducing a non-operational risk.

Key Decisions for Investors

• Investors could view the company's strong operational momentum, evidenced by raised guidance and a new SMB channel partnership, as justification for its premium multiple and a basis for a long position.
• It is prudent to weigh the bullish case against the valuation concerns highlighted by multiple analysts and the competitive risks posed by fiber infrastructure, which could limit upside from the current price.
• Monitor the impact of planned second-half investments on near-term EBITDA margins and stay alert to developments regarding the political scrutiny, as these represent key risks to the investment thesis.