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Pro Analysis

T-Mobile to rally 23% on rising revenue: Jefferies

An employee, center, assists customers at a T-Mobile US store in New York.
Michael Nagle | Bloomberg | Getty Images
An employee, center, assists customers at a T-Mobile US store in New York.

Jefferies made wireless provider T-Mobile one of its top stock picks because the company will post strong revenue growth and subscriber gains this year, making it an industry leader.

"With subscriber momentum likely to continue, ARPU [average revenue per user] trends stabilized, and bad debt at manageable levels, we anticipate unrivaled FCF [free cash flow] growth in the next couple of years. Though shares have underperformed in this yield-thirsty market, we expect a refocus on fundamentals to drive outperformance and add TMUS to our Franchise Pick List," said Jefferies' Mike McCormack in a Thursday note to clients.

The analyst raised T-Mobile's year-end price target to $55 from $45, representing a 23 percent gain from Wednesday's close. The stock is up 14 percent this year, but trails the 20 percent-plus gains of competitors AT&T and Verizon.