Why T-Mobile Trumps Sprint In The Investing World

D.A. Davidson's James Moorman said that not only is T-Mobile growing at a clip that may help its margins expand, but its revenue growth could help the company be a "takeout candidate by a cable company in late 2016 or early 2017."

That potential helped Moorman slap a $50 price target on the stock – roughly 25 percent above current price at $40.37.

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Slacking Sprint?

At Sprint, management is still "trying to turn the ship around," Moorman argued. Though the company may benefit from expanding margins, which Moorman forecast would move from 17.4 percent in 2014 to 27.6 percent in 2017, the company is still highly levered with debt of $34.1 billion. Moorman's 12-month price target is $4.50, just 6.5 percent above current price.

600MHz Spectrum Auction

That high leverage will impact Sprint when it comes to building out its network. The company will not participate in an upcoming 600MHz spectrum auction. T-Mobile on the other hand will participate – and Moorman said that the company may bid in the high single-digit millions for space.

T-Mobile's outperformance has not been confined to this year. In 2014, Sprint declined 61.5 percent, compared with a 12.5 percent decline in T-Mobile. Both of those names were handily outperformed by the S&P 500, which gained 11.8 percent.

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