With T-Mobile Us Inc (NASDAQ: TMUS) down nearly 10 percent since the end of April, investors should consider buying regardless of the outcome of a reported merger with Sprint Corp (NYSE: S), according to Wells Fargo.

The Analyst

Wells Fargo's Jennifer Fritzsche upgraded T-Mobile from Market Perform to Outperform with a price target lifted from $65 to $77.

The Thesis

T-Mobile's potential tie-up with Sprint will be by no means "a layup" — but if the deal is approved, it can work in T-Mobile's favor, Fritzsche said in the upgrade note. (See the analyst's track record here.)

The "New T-Mobile" would boast licenses for around 316 MHz on average of nationwide spectrum, which is more than twice that of its two biggest competitors.

The FCC is likely to take a more open-minded view and acknowledge the competitive environment and landscape has evolved quickly over the past few years, Fritzsche said. If T-Mobile does not merge with Sprint, the stock's valuation is still "quite compelling," as the company is likely to allocate $7 billion to repurchase stock and boast a 30-percent free cash flow growth trajectory through 2019, the analyst said.

Wells Fargo's $77 price target is based on a discounted cash flow scenario analysis with the merger taking shape. As a standalone company, T-Mobile is worth $70 per share, which still implies 18-percent upside from current levels, Fritzsche said.

Price Action

Shares of T-Mobile were trading nearly flat Thursday morning.

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Photo courtesy of T-Mobile.