Morgan Stanley Expects T-Mobile to Start ‘Smaller’ With Share Buybacks

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A Morgan Stanley analyst named T-Mobile (NASDAQ:TMUS) a catalyst driven idea as it expects the company to announce the commencement of its buyback program with third-quarter earnings.

The analyst has an Overweight rating and a $159 price target on the stock.

He told investors that they expect T-Mobile to announce “board approval and commencement of a share buyback program with 3Q22 earnings in late-October/early-November (3Q earnings were released on November 2 last year).”

“At the company’s analyst day in March 2021, management outlined potential shareholder returns of up to $60bn from 2023 to 2025 but has repeatedly indicated these returns could begin sooner,” wrote the analyst. “The size of this potential program is notable at >30% of the company’s market cap and >65% of the company’s free float (excluding shares controlled by Deutsche Telekom (OTC:DTEGY) and SoftBank).”

The analyst outlined three potential scenarios, which include no announcement of buybacks, beginning with a smaller amount or a larger sooner policy. Morgan Stanley believes T-Mobile will start smaller.

“Our base case is most similar to scenario 2. We assume $12bn in buybacks in 2023, though we have not officially modeled an early commencement in 2022,” commented the analyst. “We expect official authorization/commencement of the buyback to drive a positive reaction for shares.”