Apple Could Lose Ground in the Fourth Quarter

Dow component Apple Inc. (AAPL) posted an all-time high on Wednesday following an analyst upgrade, lifting its 2021 year-to-date return to 16.4%. Bullish summer sentiment throughout the big tech universe has underpinned this uptick, which is also feeding on positive reaction to the iPhone 12 Pro, released in the October 2020. However, there are technical dents in the icon’s shiny armor, raising odds that bears will take control in the fourth quarter.

Strong Upgrade Cycle

Analysts estimate that Apple has added 3% market share in China at the expense of Huawei, which now controls about 8% of sales. Here in the United States, telecom providers AT&T Inc. (T), Verizon Communications Inc. (VZ), and T-Mobile US Inc. (TMUS) have restarted aggressive promotions to existing customers, generating a positive impact on upgrade rates. Growing competition for 5G phones should force these companies to extend promotions well into the iPhone 13 product cycle.

Wolfe Research analyst Jeff Kvaal upgraded Apple to ‘Peer Perform’ on Wednesday, noting “we lift our FY22 iPhone unit/ASP assumptions from 228mn/$824 to 232mn/$833 given well-aligned US promotions and ongoing share gains. This translates into 4.6% sales growth and EPS of $5.85 (consensus 3.3%/$5.64). Recent PC results indicate demand remains well ahead of supply. We consider both products on a permanently higher trajectory as ~50% of shipments through the pandemic have been to new users”.

Wall Street and Technical Outlook

Wall Street consensus stands at an ‘Overweight’ rating after 2020’s historic 80% return, based upon 27 ‘Buy’, 5 ‘Overweight’, 9 ‘Hold’, 1 ‘Underweight’, and 1 ‘Sell’ recommendation. Price targets currently range from a low of $90 to a Street-high $190 while the stock is set to open Thursday’s session about $15 below the median $168 target.  Closing the distance into the median target could be tougher than it looks, given technical red flags.

Apple broke out above the January 2020 high at a split-adjusted 81.96 and entered an historic advance that stalled in the upper 130s in September. The stock has added just 16 points in the last 12 months, posting an all-time high at 154.98 on Wednesday. The rally has nearly reached the trendline of rising highs over that period, exposing hidden resistance. More importantly, buying pressure has gone to sleep, slumping well below October 2020 and January 2021 peaks, suggesting it will take little energy to generate a major downdraft.

For a look at all of today’s economic events, check out our economic calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication. 

The Hottest Stocks On The Market Right Now

Stocks are back at all-time highs so the party goes on!

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Activision Blizzard is still below crucial horizontal resistance.

Equinix escapes from the symmetric triangle to the upside.

3M does the same but to the downside.

Same with British American Tobacco.

T-Mobile patiently waits for the buy signal inside of the wedge pattern.

Same for Royal Dutch Shell, but in this case, we’re in the triangle/rectangle.

Rolls-Royce climbs higher after the breakout of the crucial horizontal resistance.

For a look at all of today’s economic events, check out our economic calendar.

T-Mobile Netherlands, KKR to Invest 700 Million Euros in Fibre Optic

The project aims to reach 1 million households within five years, it said.

T-Mobile competes against KPN and VodafoneZiggo in the Netherlands.

In March, KPN announced a 440 million euro partnership with pension fund giant ABP to speed up its fibre optic rollout, targeting customers in under-served areas.

KPN, which says it already reaches one third of the Netherlands’ 8 million households, plans to reach another 2.5 million by 2026.

(Reporting by Toby Sterling; editing by Jason Neely)

T-Mobile Revenue Beats Wall Street Estimates; Target Price $172 in Best Case

T-Mobile US Inc, the third-largest US wireless carrier by subscribers, reported better-than-expected revenue in the fourth quarter and said it added more subscribers as demand for its phone and internet services rose during the COVID-19 pandemic.

The wireless carrier said its total revenue rose to $20.34 billion, up from $11.88 billion seen in the same period a year ago. That was also higher than the Wall Street consensus estimate of $19.93 billion.

T-Mobile’s postpaid phone subscriber base increased by 824 thousand in Q4 2020, which they said is best in industry. This year the company forecasts postpaid net customer additions to be between 4 million and 4.7 million.

“Looking forward, the firm expects to generate $26.5-$27.0 billion of adjusted EBITDA in 2021, about 10% lower than we had anticipated. However, several accounting issues will affect earnings during the year, including the treatment of the agreement recently reached with American Tower,” said Michael Hodel, director at Morningstar.

“Management also expects to add 4.0-4.7 million net postpaid customers during 2021, stronger than our previous projection of 3.5 million. The firm also has a long track record of handily exceeding its initial forecast on this measure and pushing growth will likely pressure margins.”

That concern did help the stock to rise despite ending 2020 on a strong note. T-Mobile shares, which surged over 70% in 2020, closed about 1% higher at $130.60 on Thursday.

T-Mobile Stock Price Forecast

Sixteen analysts who offered stock ratings for T-Mobile in the last three months forecast the average price in 12 months at $147.53 with a high forecast of $172.00 and a low forecast of $120.00.

The average price target represents a 12.96% increase from the last price of $130.60. From those 16 analysts, 14 rated “Buy”, two rated “Hold”, and none rate “Sell”, according to Tipranks.

Morgan Stanley gave a base target price of $143 with a high of $181 under a bull scenario and $81 under the worst-case scenario. The firm currently has an “Overweight” rating on the wireless carrier’s stock.

Several other analysts have also recently commented on the stock. RBC raised the target price to $133 from $120. Cowen and Company lowered the price objective to $147 from $159. Credit Suisse increased the target price to $150 from $146. T-Mobile US had its price objective increased by KeyCorp to $155 from $135. The firm currently has an overweight rating on the Wireless communications provider’s stock.

In addition, Bank of America upped their price target to $155 from $130 and gave the stock a buy rating. Truist upped their price objective to $135 from $125. JP Morgan set a $150 price objective on shares of T-Mobile US and gave the stock a buy rating.

Analyst Comments

“With the closing of the Sprint merger on April 1, T-Mobile has established itself on relatively equal footing with AT&T and Verizon. Postpaid market share now stands at nearly 30% with the company targeting 2-4% service revenue growth,” said Simon Flannery, equity analyst at Morgan Stanley.

“The company will be focused on the large integration ahead as it targets $6bn+ in run-rate synergies with the majority coming from decommissioning the legacy Sprint network and moving those subscribers over to a new 5G network. Fixed wireless broadband-enabled by the company’s enhanced mid-band spectrum portfolio could open up an $80bn+ adjacent TAM.”

Upside and Downside Risks

Risks to Upside: 1) Better net adds and ARPU growth driven by new 5G network. 2) Quicker synergy realization. 3) Significant growth in fixed wireless broadband – highlighted by Morgan Stanley.

Risks to Downside: 1) High churn of Sprint subscriber base. 2) Difficulty in achieving synergy targets and integrating Sprint subscribers. 3) Wireless competition intensifies pressuring ARPUs.

Check out FX Empire’s earnings calendar

T-Mobile Shares Gain Over 6% After Earnings Beat; Buy with Target Price $138

T-Mobile US Inc, the third-largest US wireless carrier by subscribers, reported better-than-expected profit and revenue in the third quarter and said it added more phone subscribers as demand bounced amid COVID-19 pandemic, sending its shares up over 6% during after-market hours trading on Thursday.

The U.S. wireless carrier said its total service revenues increased year-over-year to $14.1 billion in Q3 2020 and total revenues increased year-over-year to $19.3 billion in Q3 2020, driven by the Sprint merger and continued customer growth. That was higher than the market expectations of $18.34 billion.

T-Mobile’s EPS was relatively flat year-over-year at $1.00 in Q3 2020, beating Wall Street estimates of $0.45 per share, as growth in net income was offset by a higher number of outstanding shares as a result of the Sprint merger. Net income increased year-over-year to $1.3 billion in Q3 2020, as revenue growth outpaced expense increases. Merger-related costs were $288 million pre-tax and $208 million, net of tax, in Q3 2020.

The wireless carrier said its postpaid phone net customer additions were 689,000 in Q3 2020, leading the industry and marking the 27th consecutive quarter of leading the national carriers. That was higher than analysts’ estimates of 422,000. Postpaid phone churn was 0.90%.

“T-Mobile US reported blowout 3Q20 results as the business has not missed a beat amidst the S merger integration. We view the 1Q21 Analyst Day and updates to merger synergy/LT financial targets as a meaningful NT catalyst. We meaningfully raised our estimates and our price target to $159,” said Colby Synesael, equity analyst at Cowen and Company.

T-Mobile US shares climbed 6.39% to $124.75 during after-market hours trading on Thursday; the stock is up about 50% so far this year.

Executive Comments

“Last quarter T-Mobile overtook AT&T to become #2 in U.S. wireless and today we announced our highest ever postpaid net adds. Now, with over 100 million wireless customers and America’s largest 5G network, there is no doubt that we’re the growth leader in wireless,” said Mike Sievert, T-Mobile CEO.

“Customers are choosing T-Mobile in record numbers because we are the only ones that can deliver this combination of value and experience with a true 5G network that is available to customers in every single state! We’re consistently and profitably outpacing the competition – and we’re just getting started!”

T-Mobile US Stock Price Forecast

Twelve equity analysts forecast the average price in 12 months at $138.50 with a high forecast of $150.00 and a low forecast of $121.00. The average price target represents an 18.11% increase from the last price of $117.26. From those 12 analysts, 11 rated “Buy”, one rated “Hold” and none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $124 with a high of $154 under a bull-case scenario and $73 under the worst-case scenario. The firm currently has an “Overweight” rating on the wireless network operator’s stock.

“Our price target assumes an 8.5x multiple on 2024e cash EBITDA discounted back at 9%. This multiple is a premium to AT&T and Verizon at 7x given higher exposure to wireless and a superior growth trajectory,” said Simon Flannery, equity analyst at Morgan Stanley.

Several other analysts have also recently commented on the stock. Credit Suisse raised the target price to $146 from $140; JP Morgan upped their stock price forecast to $150 from $140; UBS increased the price target to $140 from $120; Evercore ISI resumed coverage with outperform rating and $150 price target. T-Mobile US had its price target hoisted by equities researchers at Citigroup to $142 from $130. Barclays reissued a “buy” rating and issued a $135.00 target price on shares of T-Mobile US in August.

We think it is good to buy at the current level with a target of $138 as 100-day Moving Average and 100-200-day MACD Oscillator signal a buying opportunity.

Analyst Comments

“With the closing of the Sprint merger on April 1, T-Mobile has established itself on relatively equal footing with AT&T and Verizon. Postpaid market share now stands at nearly 30% with the company targeting 2-4% service revenue growth,” Morgan Stanley’s Flannery added.

“The company will be focused on the large integration ahead as it targets $6bn+ in run-rate synergies with the majority coming from decommissioning the legacy Sprint network and moving those subscribers over to a new 5G network. Fixed wireless broadband-enabled by the company’s enhanced mid-band spectrum portfolio could open up an $80bn+ adjacent TAM.”

Upside and Downside Risks

Upside: 1) Better net adds and ARPU growth driven by new 5G network. 2) Quicker synergy realization. 3) Significant growth in fixed wireless broadband – highlighted Morgan Stanley.

Downside: 1) High churn of Sprint subscriber base. 2) Difficulty in achieving synergy targets and integrating Sprint subscribers. 3) Wireless competition intensifies pressuring ARPUs.

Check out FX Empire’s earnings calendar

T-Mobile US Q2 Revenue Jumps 61%, Overtakes AT&T as Second-Largest Carrier; Target Price $115

T-Mobile US Inc, an American wireless network operator, said its revenue jumped 61% to $17.67 billion in the second quarter, beating Wall Street estimates and added it has overtaken rival AT&T Inc as the second-largest wireless provider in the world’s biggest economy, sending its shares over 5% pre-market trading on Friday.

The telecommunications company headquartered in Washington said it add 1,245,000 new customers in the second quarter of this year, pushing its total customer count to 98.3 million, overtaking AT&T in total branded customers across both postpaid and prepaid.

T-Mobile’s Total revenues increased 61% to $17.7 billion in Q2 2020, driven by the Sprint merger and continued customer growth at T-Mobile. That was higher than strategists’ estimates of $17.61 billion, according to IBES data. The company said its net income declined to $110 million, or 9 cents per share, from $939 million, or $1.09 per share, a year earlier.

“We don’t expect to materially change our $89 fair value estimate and we view the shares as modestly overvalued,” said Michael Hodel, director at Morningstar.

On Thursday, T-Mobile US’ shares closed 0.19% higher at $108.10 but gained over 5% in pre-hours trading on the last trading day of the week.

Executive comment

“Surpassing AT&T to become #2 was a huge milestone to kick off Q2, but that was only the beginning! In our first quarter as a combined company, T-Mobile led the industry in total branded customer adds – even in a challenging environment – and there is no doubt that we are THE leading growth company in wireless,” Mike Sievert, T-Mobile CEO said in a press release.

“Now we’re setting our sights on #1 – in customer choice and customers’ hearts – and we’ll get there by doing ONLY what the Un-carrier can do: offering customers the most advanced 5G network AND the best value while continuing to make big moves that fix customer pain points and disrupt this industry. I’m excited about what’s to come in this new T-Mobile era – we’re just getting started!”

T-Mobile US stock forecast

Sixteen analysts forecast the average price in 12 months at $119.50 with a high forecast of $140.00 and a low forecast of $94.82. The average price target represents a 10.55% increase from the last price of $108.10. From those 16, 13 analysts rated ‘Buy’, three analysts rated ‘Hold’ and none rated ‘Sell’, according to Tipranks.

Morgan Stanley target price is $115 with a high of $146 under a bull scenario and $62 under the worst-case scenario. JPMorgan raised the target price to $140 from $110 and Deutsche bank kept target price unchanged at $140 target price, upped the rating to buy from hold.

Several other equity analysts have also updated their stock outlook. T-Mobile U.S. received a $110 price target from analysts at Royal Bank of Canada. The firm presently has a “neutral” rating. KeyCorp boosted their target price to $126 from $104 and gave the company an “overweight” rating. Nomura Instinet boosted their target price on T-Mobile U.S. to $110 from $102 and gave the company a “buy” rating.

We think it is good to buy at the current level and target at least $115 as 100-day Moving Average and 100-200-day MACD Oscillator signal a strong buying opportunity.

Analyst comment

“With the closing of the Sprint merger on April 1, T-Mobile has established itself on relatively equal footing with AT&T and Verizon. Postpaid market share now stands at nearly 30% with the company targeting 2-4% service revenue growth,” Morgan Stanley’s McLeod added.

“The company will be focused on the large integration ahead as it targets $6bn+ in run-rate synergies with the majority coming from decommissioning the legacy Sprint network and moving those subscribers over to a new 5G network. Fixed wireless broadband-enabled by the company’s enhanced mid-band spectrum portfolio could open up an $80 billion + adjacent TAM,” the analyst added.

Upside and Downside risks

1) Better net add and ARPU growth driven by new 5G network 2) Quicker synergy realization 3) Significant growth in fixed wireless broadband, Morgan Stanley highlighted as upside risks to T-Mobile.

1) High churn of Sprint subscriber base. 2) Difficulty in achieving synergy targets and integrating Sprint subscribers. 3) Wireless competition intensifies pressuring ARPUs, were major downside risks.

Deutsche Telekom in Talks to Buy Out Shares in T-Mobile From Softbank

Deutsche Telekom, by revenue the largest telecommunications provider in Europe, announced that it is in talks to acquire stakes in its U.S. subsidiary T-Mobile from Japanese multinational conglomerate holding company Softbank.

The European telecommunications leader, Deutsche Telekom, that delivers services to more than 150 million global customers, owns over 40% stake in its U.S. subsidiary T-Mobile but it can vote shares owned by Japanese holding company SoftBank.

That brings its voting stake to 67%, ensuring overall financial control and allow the company to consolidate the financial statement of T-Mobile. Hoettges added that the negotiation is still in its nascent stage will inform when one has reached.

CEO Tim Hoettges’ comment

CEO Tim Hoettges on Friday said that the deal will be under a shareholder agreement and it has the right of first refusal.

According to Reuters, Hoettges, answering a question at Deutsche Telekom’s annual general meeting, said Softbank was seeking to sell down its stake due to “heightened liquidity needs arising from the demanding economic environment”.

He further noted that, under a 4-year shareholder agreement that entered effect when T-Mobile completed its acquisition of Sprint, Deutsche Telekom had the pre-emptive purchase right to ensure it retains control of its U.S. subsidiary, Reuters reported.

CEO also confirmed that the profit outlook was resilient to the coronavirus pandemic.

“Of course, we are also feeling the effects. From bad debts. Forgone roaming revenues and temporary shop closures,” Hoettges said, according to pre-released extracts of his video address to the event which is being held online.

“But we are confident that we will bounce back. Because digitalization is everywhere right now. And this brings us opportunities.”

Stock price outlook

According to Tipranks, three analysts forecast the average price in 12 months at $18.83 with a high of $19.28 and a low of $17.93. The average price target represents a 10.76% increase from the last price of $17.00.