T-Mobile shares decline 1.3% following KeyBanc downgrade to 'underweight'

T-Mobile shares decline 1.3% following KeyBanc downgrade to 'underweight'

T-Mobile US (NASDAQ: TMUS) experienced a 1.3% decline in its share price on July 2, 2025, following a downgrade by KeyBanc Capital Markets to 'underweight' [1]. The downgrade comes amid concerns over T-Mobile's fiber infrastructure and the potential impact of macroeconomic pressures on the company's growth prospects.

KeyBanc analysts cited T-Mobile's perceived "fiber deficiency" in a converged and bundled world as a significant factor in their decision to downgrade the stock. They also highlighted near-term macroeconomic and competitive pressures that could limit T-Mobile's upside potential. Additionally, the research firm noted a deterioration in T-Mobile's consumer value proposition following recent pricing actions, which may hinder the company's ability to capture a larger share of the industry's net additions.

Despite these concerns, T-Mobile maintains strong financial health, with a gross profit margin of 63.85% and revenue growth of 5.31% over the past twelve months. The company's stock has risen by over 33% in the past year, despite recent analyst concerns.

KeyBanc also pointed out that T-Mobile may benefit less than its peers from potential tax changes due to OBBB (Optimized Broadband Buildout Benefits), further supporting their downgrade rationale. The firm lowered its financial estimates for T-Mobile, citing an excessive premium valuation of approximately 9.5 times their 2026 adjusted EBITDA estimates, compared to the three-year average of 9.4x and the peer average of 7.6x.

In other recent developments, T-Mobile reported positive first-quarter results for 2025, showing slight increases in revenue and EBITDA, alongside better-than-expected gains in fixed wireless access and prepaid customers. However, the company's shares have seen a decline due to concerns over high industry activity affecting margins and potential CEO succession issues. Additionally, T-Mobile has launched its new Revvl Tab 2 tablet, priced at $169.99, which it claims is the most affordable 5G tablet in the market.

In a significant transaction, SoftBank Group Corp. sold $4.8 billion worth of T-Mobile shares to fund artificial intelligence initiatives. The sale involved 21.5 million shares at $224 each, marking a 3% discount to T-Mobile's previous closing price.

Analysts from BofA Securities, Redburn-Atlantic, and TD Cowen have issued varying ratings for T-Mobile, with BofA Securities reinstating coverage with a Neutral rating, Redburn-Atlantic upgrading from Sell to Neutral, and TD Cowen maintaining its Buy rating.

References:
[1] https://www.investing.com/news/analyst-ratings/keybanc-downgrades-tmobile-stock-to-underweight-on-fiber-concerns-93CH-4127468