Telecommunications company T-Mobile Inc. (TMUS) may not have the same reach as market leaders AT&T Inc. (T) and Verizon Communications Inc. (VZ), but its prospects should not be underestimated, according to one team of bulls on the Street. 

On Tuesday, Guggenheim initiated coverage on T-Mobile stock at buy, along with a 12-month price target of $80, reflecting a 22% upside from Tuesday morning. Trading up 1.5% and $65.52, TMUS has underperformed the market over the most recent 12 months, gaining 5.9% compared to the S&P 500's 17.9% return over the same period. Over the past month however, TMUS shares are up over 12.6%, compared to the market's 5.3% increase. In December, the company announced a $1.5 billion stock repurchase program. (See also: Verizon’s NFL Deal Just the Beginning: Instinet.)

In a note to clients on Monday titled "The Uncarrier Looks Unstoppable," Guggenheim's Mark McCormack indicated that the mobile communications company is posed to grab more market share from its rivals as it doubles down on its network and turns cash flow positive. "T-Mobile is in a unique position among the carriers. While it does not enjoy the scale economics of AT&T and Verizon, it enjoys the advantage of having the superior position of growth as it takes continuous share from the other carriers," wrote McCormack. "The company also is enjoying the fruits of its growth and has turned cash flow positive."

A Successful Turnaround

McCormack, who declared TMUS his investment firm's best idea in telecommunications, highlighted Chief Executive Officer John Legere's role in championing a turnaround at the carrier following its failed merger with Sprint Corp. (S) in 2017. 

"Suffering from network inferiority, lack of the iPhone, and a languishing brand image, the new team began the journey to recovery," he wrote. "Fighting through declining average revenue per user, as the company moved to unsubsidized rate plans, subscriber growth fueled the company's turnaround and far outpaced the growth of other carriers. In fact, as of now, T-Mobile is the only carrier that grows service revenue."

The analyst foresees T-Mobile's next strategic move as growing its retail presence after opening 1,500 retail stores last year and acquiring spectrum to build its geographical reach, an "easy" means to steal share from its main competitors. That being said, McCormack rates Verizon and AT&T stock at buy, and recommends selling Sprint, which he sees as competitively challenged amid "rapid transformation change" in the telecom space. (See also: T-Mobile Sell-Off Fuels "Buy" Upgrade: Deutsche.)

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