Our target price of $268 is based on the simple average of three methods: EV/OIBDA, P/FCF, and DCF.

On an EV/OIBDA basis, we value TMUS at an 9.5x multiple on our 2026E Core OIBDA estimate of $36.9 billion to arrive at a firm value of $351 billion. We deduct 2026E net debt of $75 billion to arrive at an equity value of $276 billion. Divided by shares outstanding, we estimate an equity value per share of $265.

On a P/FCF basis, we apply a 13.5x multiple on our 2026 normalized FCFPS estimate of $19.47 (on diluted shares) to arrive at a valuation of approximately $263 per share with a forward 3-year FCF CAGR of around 13% between 2026 and 2029. 

Our DCF analysis incorporates our forecasts for service revenue that scale to $52 billion by 2030. Using a WACC of 7.4%, we include a terminal unlevered FCF growth rate of 1.5% and calculate a terminal FCF multiple of ~16.8x. We reach an operating EV of about $367 billion. We subtract net debt of $75 billion, to derive TMUS's equity value of roughly $280 per share.

Downside risks to our thesis, target price, and current share price include: 1) greater competition from wireless MNOs and MVNOs may add downward pressure to service pricing and upward pressure to acquisition and retention costs, thereby creating risk to our future financial forecasts; 2) a recession could increase bad debt levels and create greater variability (and possible underperformance) for its prepaid and postpaid segments; 3) inflationary cost pressures could reduce operating leverage and annual financial performance; and 4) higher investment levels and/or higher interest rates could dilute future annual FCF. The net impacts of these risks may dilute annual EBITDA/FCF from our expectations and could negatively impact the equity- and firm-value multiples at which the stock trades.

Positive risks to our thesis include: 1) a further acceleration in financial growth as T-Mobile continues to take share in the category; 2) investments in new growth verticals, such as fiber, D2D satellite coverage, and digital advertising, may be more accretive to financial performance and the equity than we currently anticipate; and 3) a stabilization of the wireless competitive landscape can be accretive to the multiples at which T-Mobile trades (on EBITDA and FCF).

Positive or adverse developments in these risk factors could cause the share price to remain above or fall below our target price.