Key Takeaways:
- Network Perception Gap: One out of three AT&T and Verizon customers chose them for network quality that no longer exists—a potential 70 million customers paying a premium that T-Mobile can capture.
- Price Projection: Based on current momentum, the stock could reach $250 by December 2027.
- Potential Gains: This target implies a total return of 36% from the current price of $184.
- Annual Return: Investors could see roughly 17% annual growth over the next 1.9 years.
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T-Mobile (TMUS) just delivered its best Q3 in over a decade with more than 1 million postpaid phone net additions and an all-time record postpaid account growth.
But the real story is about a widening competitive gap that incoming CEO Srini Gopalan is positioning to exploit aggressively.
- The company’s network now delivers download speeds 90% faster than one benchmark competitor and 40% faster than the other on the new iPhone.
- With 75% of iPhone upgrades happening digitally and network perception among switchers at an all-time high, T-Mobile is executing on multiple fronts simultaneously.
Despite a strong performance that saw postpaid service revenue grow 12% year-over-year, TMUS stock is down almost 40% from all-time highs.
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What the Model Says for T-Mobile US Stock
We analyzed T-Mobile through the lens of its transformation from network underdog into industry leader with the widest margin of differentiation in wireless.
The company is capitalizing on two massive trends: growing network leadership (both in reality and perception) and digital transformation that removes friction from the customer experience.
Combined with expanding broadband opportunities through both 5G fixed wireless and fiber, T-Mobile has multiple growth engines firing.
Using a forecast of 6.7% annual revenue growth and 23.9% operating margins, our model projects the stock will rise to $250 by the end of December 2027. This assumes a 14.6x price-to-earnings multiple.
That represents compression from T-Mobile’s current P/E of 16.8x.
As the company invests in UScellular integration and accelerates network transformation initiatives, some multiple compression is reasonable. The real value comes from sustained customer growth driven by widening differentiation and successful execution on broadband expansion.
Our Valuation Assumptions
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Our Valuation Assumptions
TIKR’s Valuation Model lets you plug in your own assumptions for a company’s revenue growth, operating margins, and P/E multiple, and calculates the stock’s expected returns.
Here’s what we used for TMUS stock:
2. Revenue Growth : 26%
T-Mobile’s growth engine benefits from broad-based momentum across markets and customer segments.
Record Customer Growth: Q3 delivered the best-ever total postpaid net additions with over 1 million postpaid phone nets. This wasn’t concentrated in a few markets—growth came from Top 100 markets, smaller markets, and rural areas. Even in markets where T-Mobile is already #1, #2, or #3 in market share, the company continues to gain household penetration.
Network Perception Breakthrough: The company’s biggest opportunity lies in closing the perception gap. Roughly 70 million AT&T and Verizon customers originally chose those carriers for network superiority that no longer exists. T-Mobile’s network perception among switchers hit an all-time high in Q3, driving outsized performance.
Broadband Expansion: The company led the industry with over 500,000 5G broadband additions and added 50,000 family fiber customers. 5G broadband ARPUs and customer lifetime values match the postpaid phone business, creating significant value. Management raised fiber guidance to 130,000 customers for the year from approximately 100,000 previously.
ARPA Growth Acceleration: Postpaid ARPA grew 3.8% organically (excluding impacts from acquisitions). Full-year underlying ARPA growth is now expected at 4%, demonstrating pricing power alongside volume growth.
2. Operating margins: 23.9%
T-Mobile operates with industry-leading efficiency while investing heavily in network leadership.
Current Performance: Core adjusted EBITDA grew 6% with exceptional service revenue to free cash flow conversion at 26%. The company is raising full-year core adjusted EBITDA guidance to $33.7-$33.9 billion, a $300 million increase at the midpoint.
UScellular Synergies: The company increased synergy guidance to $1.2 billion in total OpEx and CapEx run-rate savings and accelerated the timeline to achieve these within 2 years of close. This follows the proven Sprint integration playbook.
Digital Transformation ROI: Three out of four iPhone upgrades during the preorder window were digital. This shift reduces cost to serve while improving customer experience. AI-powered IntentCX from the OpenAI partnership is already reaching customers and affecting results.
3. Exit P/E Multiple: 14.6x
The market currently values T-Mobile at 16.8x earnings. We chose 14.6x for our exit multiple to stay conservative.
Below Historical Average: T-Mobile’s P/E has averaged 21.2x over the past year and 29.3x over 10 years. The current multiple reflects strong fundamentals, but some compression is reasonable as the business matures from high-growth phase.
Quality Premium Warranted: T-Mobile deserves a premium to traditional telecom valuations due to its network leadership (speeds 90% faster than competitors), 26% cash conversion rate, expanding broadband TAM targeting 12 million fixed wireless and 12-15 million fiber homes connections, and proven ability to gain share while improving margins.
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What Happens If Things Go Better or Worse?
Wireless markets face competition and technology disruption. Here’s how T-Mobile stock might perform under different scenarios through December 2027:
- Low Case: If revenue growth slows to 4.9% and margins compress to around 17%, the stock still offers an 11.7% annual return.
- Mid Case: With 5.4% growth and 17% margins (our base assumptions converted to net income margins), we expect an annual return of 17.3%.
- High Case: If network perception closes faster and T-Mobile maintains 18% margins while growing at 5.9%, returns could hit 22.2% annually.
See what analysts think about TMUS stock right now (Free with TIKR) >>>
The range reflects different speeds of closing the network perception gap and broadband penetration rates. In the low case, competitors narrow the network quality gap or promotional intensity increases.
In the high case, T-Mobile’s digital transformation accelerates customer acquisition, the 70 million perception opportunity converts faster than expected, and broadband businesses scale efficiently.
How Much Upside Does T-Mobile US Stock Have From Here?
With TIKR’s new Valuation Model tool, you can estimate a stock’s potential share price in under a minute.
All it takes is three simple inputs:
- Revenue Growth
- Operating Margins
- Exit P/E Multiple
If you’re not sure what to enter, TIKR automatically fills in each input using analysts’ consensus estimates, giving you a quick, reliable starting point.
From there, TIKR calculates the potential share price and total returns under Bull, Base, and Bear scenarios so you can quickly see whether a stock looks undervalued or overvalued.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
