KeyBanc Capital Markets has downgraded the stock of wireless internet provider T-Mobile (TMUS), saying that a big rally in the share price has left the valuation looking “stretched.”
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Brandon Nispel, a four-star rated analyst at KeyBanc, lowered his rating for TMUS stock to a Hold-equivalent “sector weight” from a Buy-equivalent “overweight” previously. He didn’t provide a price target on the stock.
“We downgrade T-Mobile based on valuation, which we think has become stretched,” he wrote in a note to clients. “Going forward, the competitive environment feels as if it is shifting…” TMUS stock has risen 47% so far this year.
Valuation Concerns
Nispel added that T-Mobile currently trades at 9.3 times his 2026 forecast for earnings versus a 6.3 times average for its main rival Verizon (VZ). T-Mobile has also started acquiring residential internet access businesses to supplement its mobile wireless offerings, which is a riskier market.
“We expect free cash flow growth to slow due to higher capital spending and cash taxes,” wrote Nispel. “With the stock trading at a meaningful premium to peers, we think there are more attractive alternatives.”
Is TMUS Stock a Buy?
T-Mobile has a consensus Strong Buy rating among 18 Wall Street analysts. That rating is based on 16 Buy and two Hold recommendations made in the last three months. There are no Sell ratings on the stock. The average TMUS price target of $242.33 per share implies 3.87% upside from current levels.
