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Lumen Technologies Inc. (LUMN)
:LUMN

Lumen Technologies (LUMN) AI Stock Analysis

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Lumen Technologies

(NYSE:LUMN)

Rating:51Neutral
Price Target:
$4.50
▼(-2.17%Downside)
Lumen Technologies scores a 51, driven by significant financial challenges, including declining revenues and high leverage. Although there are positive strategic initiatives and corporate events aimed at improving financial flexibility, these are counterbalanced by valuation concerns and ongoing operational risks.
Positive Factors
Asset Sale
The company's sale of FTTH assets and customers could improve leverage and drive equity value.
Service Innovations
New service innovations that bypass costly cross-connects could be unmatched and game-changing for customers.
Strategic Bidding
AT&T and possibly its JV partner Gigapower are seen as top bidders for Lumen's consumer fiber operations, which would be positive as they are expected to build at a faster pace.
Negative Factors
Business Segment Challenges
Lumen needs to improve Business segment financials, which is likely to take time.
Top Line Decline
Continued risk from declining top line prevents assigning the highest rating despite positive outlook.
Valuation Concerns
The stock reacted negatively to the news because the valuation seemed low compared to previous reports.

Lumen Technologies (LUMN) vs. SPDR S&P 500 ETF (SPY)

Lumen Technologies Business Overview & Revenue Model

Company DescriptionLumen Technologies, Inc., a facilities-based technology and communications company, provides various integrated products and services under the Lumen, Quantum Fiber, and CenturyLink brands to business and residential customers in the United States and internationally. The company operates in two segments, Business and Mass Markets. It offers compute and application services, such as cloud services, IT solutions, unified communication and collaboration solutions, colocation and data center services, content delivery services, and managed security services; and IP and data services, including VPN data network, Ethernet, internet protocol (IP), and voice over internet protocol. The company also provides fiber infrastructure services comprising high bandwidth optical wavelength networks; and unlit optical fiber and related professional services. In addition, it offers voice and other services, including private line services, a direct circuit or channel specifically dedicated for connecting two or more organizational sites; a portfolio of traditional time division multiplexing voice services; and synchronous optical network-based Ethernet, legacy data hosting services, and conferencing services. As of December 31, 2021, the company served approximately 4.5 million broadband subscribers. The company was formerly known as CenturyLink, Inc. and changed its name to Lumen Technologies, Inc. in September 2020. Lumen Technologies, Inc. was incorporated in 1968 and is headquartered in Monroe, Louisiana.
How the Company Makes MoneyLumen Technologies generates revenue through a variety of streams, primarily by providing network and data services to enterprise customers. Its key revenue streams include fiber-optic internet services, voice and data communication solutions, managed services, and cloud infrastructure services. Lumen also earns income from partnerships with technology companies and government contracts. The company focuses on enterprise clients, offering tailored solutions that integrate their communication and IT needs, which plays a significant role in its earnings.

Lumen Technologies Earnings Call Summary

Earnings Call Date:May 01, 2025
(Q1-2025)
|
% Change Since: 30.68%|
Next Earnings Date:Aug 05, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted strong financial performance, operational improvements, and strategic initiatives in AI and cloud, indicating a positive outlook. However, there were challenges in legacy product revenues and overall revenue decline, balancing the sentiment.
Q1-2025 Updates
Positive Updates
Strong Financial Performance
Lumen Technologies beat consensus for revenue, EBITDA, and free cash flow. North American business Grow revenue increased by 7.9% year-over-year, and Wave's revenue also grew year-over-year.
Operational Excellence
Material progress was made in upgrading systems, simplifying product portfolio, unifying networks, and improving execution. The company aims to generate at least $250 million in savings exiting 2025 and $1 billion exiting 2027.
AI and Cloud Initiatives
Continued focus on building the backbone for AI with a significant expansion of the fiber network and partnerships like the one with Google Cloud, providing direct fiber access to customer data centers.
Balance Sheet Improvements
Refinanced $2.4 billion in term loans, reducing annual interest expense by approximately $55 million and extending the loan maturity to 2032. This was supported by recent credit rating upgrades.
Mass Market Fiber Growth
Fiber broadband revenue grew 22.9% year-over-year, and Lumen added 101,000 fiber-enabled homes and 39,000 quantum fiber customers in Q1.
Negative Updates
Overall Revenue Decline
Total reported revenue declined by 3.3% to $3.182 billion. Business segment revenue declined by 2.6% to $2.524 billion, and the mass market segment revenue declined by 5.9% to $658 million.
Legacy Product Challenges
Nurture products revenue decreased 16.6% year-over-year, and Harvest product revenue decreased 9.8% year-over-year, primarily impacted by declines in TDM-based voice.
Mixed Public Sector Performance
While public sector revenue grew 14.7% year-over-year, there were mentions of potential revenue drag due to the rerating in the wholesale TDM space.
Company Guidance
In the first quarter of 2025, Lumen Technologies reported strong financial performance, exceeding consensus expectations for revenue, EBITDA, and free cash flow. North American business growth was highlighted with a 7.9% year-over-year increase in Grow revenue, although total North American business revenue saw a slight decline of 2.2% year-over-year, significantly better than industry peers. The company also noted an over 8% improvement in absolute dollar disconnects compared to the first quarter of 2024, contributing to revenue and EBITDA performance. Lumen is on track to achieve $250 million in savings by the end of 2025 and $1 billion by 2027, driven by modernization and simplification initiatives, including the construction of $8.5 billion in private connectivity fabric projects. The company continues to innovate by leveraging its expansive fiber network and new digital platform, aiming to disrupt traditional cloud connect models and addressing a growing $15 billion total addressable market.

Lumen Technologies Financial Statement Overview

Summary
Lumen Technologies faces financial challenges with declining revenues and a negative net profit margin. The company has a high debt-to-equity ratio, indicating significant leverage and potential solvency risks. However, there are positive aspects such as improved EBIT and EBITDA margins and positive cash flow ratios.
Income Statement
42
Neutral
Lumen Technologies has experienced declining revenue over the years, with TTM revenue of $13.0 billion compared to $20.7 billion in 2020. The gross profit margin for TTM is approximately 55.43%, which is strong, but the net profit margin is negative due to a net loss. EBIT and EBITDA margins have improved in the TTM compared to 2023's negative figures, indicating some recovery in operating efficiency.
Balance Sheet
35
Negative
The company's balance sheet shows high leverage, with a debt-to-equity ratio of approximately 62.05 in TTM. Stockholders' equity has significantly decreased over time, impacting the equity ratio, which stands at about 0.86% for TTM, indicating a highly leveraged financial structure with potential solvency risks.
Cash Flow
55
Neutral
Lumen's cash flow analysis reveals a positive operating cash flow to net income ratio, suggesting effective cash generation despite net losses. The free cash flow growth is negative compared to prior years, but the free cash flow to net income ratio is positive, indicating some level of cash flow stability despite financial challenges.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue13.00B13.11B14.56B17.48B19.69B20.71B
Gross Profit5.52B6.41B7.41B9.61B11.20B11.78B
EBITDA3.77B4.10B-6.09B3.58B8.52B5.90B
Net Income-313.00M-55.00M-10.30B-1.55B2.03B-1.23B
Balance Sheet
Total Assets33.54B33.50B34.02B45.58B57.99B59.39B
Cash, Cash Equivalents and Short-Term Investments1.90B1.89B2.23B1.25B354.00M406.00M
Total Debt17.93B18.16B20.26B20.92B29.37B32.22B
Total Liabilities33.25B33.03B33.60B35.14B46.15B48.23B
Stockholders Equity289.00M464.00M417.00M10.44B11.84B11.16B
Cash Flow
Free Cash Flow1.02B1.10B-940.00M1.72B3.60B2.79B
Operating Cash Flow4.33B4.33B2.16B4.74B6.50B6.52B
Investing Cash Flow-2.90B-2.83B-1.20B5.48B-2.71B-3.56B
Financing Cash Flow-1.10B-1.85B-18.00M-9.31B-3.81B-4.25B

Lumen Technologies Technical Analysis

Technical Analysis Sentiment
Positive
Last Price4.60
Price Trends
50DMA
4.04
Positive
100DMA
4.19
Positive
200DMA
5.35
Negative
Market Momentum
MACD
0.14
Negative
RSI
63.75
Neutral
STOCH
85.67
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LUMN, the sentiment is Positive. The current price of 4.6 is above the 20-day moving average (MA) of 4.22, above the 50-day MA of 4.04, and below the 200-day MA of 5.35, indicating a neutral trend. The MACD of 0.14 indicates Negative momentum. The RSI at 63.75 is Neutral, neither overbought nor oversold. The STOCH value of 85.67 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for LUMN.

Lumen Technologies Risk Analysis

Lumen Technologies disclosed 43 risk factors in its most recent earnings report. Lumen Technologies reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Lumen Technologies Peers Comparison

Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
TKTKC
77
Outperform
$5.42B12.846.74%3.84%14.09%-11.43%
PHPHI
71
Outperform
$4.74B8.9728.10%7.26%-0.91%11.25%
71
Outperform
$6.52B18.2710.19%1.98%-1.52%4874.58%
61
Neutral
$41.24B-0.79-14.21%3.80%2.39%-73.52%
TETEO
55
Neutral
$3.84B19.263.99%-12.77%40.80%
TDTDS
53
Neutral
$3.82B-0.97%0.45%-5.14%78.63%
51
Neutral
$4.72B-78.94%-7.86%97.11%
* Communication Services Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
LUMN
Lumen Technologies
4.60
3.54
333.96%
PHI
PLDT
22.63
-1.56
-6.45%
TEO
Telecom Argentina
9.05
2.23
32.70%
TKC
Turkcell Iletisim
6.23
-1.57
-20.13%
TIGO
Millicom International Cellular SA
37.90
14.25
60.25%
TDS
Telephone & Data Systems
35.59
15.38
76.10%

Lumen Technologies Corporate Events

Private Placements and FinancingBusiness Operations and Strategy
Lumen Technologies Completes $2 Billion Notes Offering
Positive
Jun 30, 2025

On June 30, 2025, Lumen Technologies‘ subsidiary, Level 3 Financing, completed a $2 billion upsized offering of 6.875% First Lien Notes due 2033. The proceeds were used to redeem existing notes and reduce interest expenses, aligning with Lumen’s strategy to simplify its capital structure and enhance financial flexibility. This move is part of Lumen’s broader effort to reposition itself as a leader in digital network services, crucial for supporting AI-driven business transformations.

The most recent analyst rating on (LUMN) stock is a Sell with a $2.00 price target. To see the full list of analyst forecasts on Lumen Technologies stock, see the LUMN Stock Forecast page.

Private Placements and Financing
Lumen Technologies Increases Private Offering to $2 Billion
Neutral
Jun 17, 2025

On June 16, 2025, Lumen Technologies announced that its subsidiary, Level 3 Financing, planned a private offering of $2.0 billion in First Lien Notes due 2033, an increase from the initially planned $1.0 billion. The proceeds will be used to redeem existing senior secured notes and pay related expenses, with the offering expected to close by June 30, 2025, subject to customary conditions.

The most recent analyst rating on (LUMN) stock is a Sell with a $2.00 price target. To see the full list of analyst forecasts on Lumen Technologies stock, see the LUMN Stock Forecast page.

M&A TransactionsBusiness Operations and Strategy
Lumen Technologies Sells Fiber Business to AT&T
Positive
May 21, 2025

On May 21, 2025, Lumen Technologies announced a definitive agreement to sell its Mass Markets fiber-to-the-home business to AT&T for $5.75 billion in cash. This transaction is expected to close in the first half of 2026, subject to regulatory approvals and other conditions. The sale will allow Lumen to focus on its enterprise market and reduce its debt, enhancing its financial flexibility and enabling further investment in its enterprise offerings. Lumen will retain its core infrastructure, including its fiber backbone and consumer copper broadband services, to continue innovating for enterprise customers. The deal is anticipated to improve Lumen’s cash flow and position it for additional refinancing opportunities, while AT&T will gain a significant consumer-focused asset with potential for growth.

The most recent analyst rating on (LUMN) stock is a Sell with a $2.00 price target. To see the full list of analyst forecasts on Lumen Technologies stock, see the LUMN Stock Forecast page.

Shareholder MeetingsStock Split
Lumen Technologies Approves Reverse Stock Split at Meeting
Neutral
May 15, 2025

At Lumen Technologies‘ Annual Meeting on May 13, 2025, shareholders voted on several key items. The board of directors was elected, KPMG LLP was ratified as the independent auditor for 2025, and a reverse stock split was approved. Additionally, amendments to the Articles of Incorporation were made, including lowering the threshold for calling special meetings and removing references to an unstaggered board. The approval of a reverse stock split allows the company to implement it before May 13, 2026, potentially impacting its stock structure and shareholder value.

The most recent analyst rating on (LUMN) stock is a Sell with a $2.00 price target. To see the full list of analyst forecasts on Lumen Technologies stock, see the LUMN Stock Forecast page.

Business Operations and StrategyFinancial Disclosures
Lumen Technologies Partners with Google for Fiber Access
Neutral
May 1, 2025

Lumen Technologies reported its first quarter 2025 results, highlighting progress in key areas such as operational excellence, AI backbone development, and telecom cloudification. Despite a net loss of $201 million, the company showed growth in North American business revenue and signed a significant partnership with Google for direct fiber access to Google Cloud. The adoption of Network-as-a-Service (NaaS) ports increased, supporting a shift towards a consumption-based model.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jul 01, 2025