Raymond James upgrades these two telecom stocks as Trump election signals lower regulatory risk

Shares of U.S. Cellular and Telephone and Data Systems may be due for more gains following President-elect Donald Trump’s victory, according to Raymond James. The investment bank upgraded both names to outperform from market perform. Its $86 price target for U.S. Cellular reflects 32% upside, while Telephone and Data Systems’ target of $51 implies more than 56% upside, as of Wednesday’s close. Analyst Ric Prentiss thinks Trump’s win signals a weaker regulatory environment that could ultimately pave the way for T-Mobile’s $4.4 billion acquisition of most of U.S. Cellular to go through . The deal is expected to close in the middle of next year. “We see significant upside in shares of both stocks given the ongoing strategic review and announced asset sales at USM, and now feel the regulatory path to approval is cleaner and timeline should be better,” he wrote in a Thursday note. “We feel the valuation cushion is large enough in both stocks to account for these risks, and we are now less concerned about the negative catalyst of the TMUS deal not going through as currently proposed,” he continued. Looking ahead, Prentiss sees U.S. Cellular in particular is headed toward becoming a standalone tower company, meaning it could trade at a “much higher” multiple in the future. TDS USM 6M mountain TDS vs. USM, six-months Both stocks have had a positive run this year, with shares of U.S. Cellular seeing gains of nearly 57% and Telephone and Data Systems advancing more than 77% year to date. The stocks have had an even bigger run in the past six months, surging around 83% and more than 111%, respectively.