(Bloomberg) -- The biggest threat to T-Mobile US Inc. as it closes in on its purchase of Sprint Corp. may not be its looming antitrust challenge, but the “long and complex integration process” after the deal is complete, according to investment bank Oppenheimer.
Analyst Timothy Horan anticipates the merger will prove difficult for shareholders, highlighting that stock in the company will likely be “dead money” for two years after closing as the combined company works through onboarding its fresh assets.
The firm downgraded T-Mobile’s stock to perform from outperform given the overhang and removed its $90 price target. While shares could pop on the merger’s approval, Horan said it will likely be fully priced at that time.
Company shares fell 1.2% on Tuesday, while Sprint fell 2.3%.
The deal is on pace to close later than Wall Street had hoped for with Bloomberg Intelligence predicting a 2020 first-quarter date after both management teams decided to stay separate until six days after a ruling on a group of states’ lawsuit to block the merger.
While Horan sees a 20% window of rejection, he views a green light for T-Mobile and Sprint as a positive for Verizon and AT&T. The two are likely to take an aggressive approach to targeting Sprint subscribers during the transition.
Oppenheimer raised its Verizon rating to outperform from perform, giving it a Street-high price target of $70 per share. Verizon rose 0.9% on the day.
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