It's been a good week for Lumen Technologies, Inc. (NYSE:LUMN) shareholders, because the company has just released its latest quarterly results, and the shares gained 6.6% to US$1.29. Revenues of US$3.3b missed analyst estimates by a little bit, but statutory earnings beat expectations by an impressive , coming in at US$0.06 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, the eleven analysts covering Lumen Technologies provided consensus estimates of US$13.0b revenue in 2024, which would reflect a noticeable 7.8% decline over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 99% to US$0.15. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$13.3b and losses of US$0.17 per share in 2024. So there seems to have been a moderate uplift in analyst sentiment with the latest consensus release, given the upgrade to loss per share forecasts for this year.
The analysts have cut their price target 5.5% to US$1.58per share, suggesting that the declining revenue was a more crucial indicator than the forecast reduction in losses. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Lumen Technologies, with the most bullish analyst valuing it at US$2.50 and the most bearish at US$1.00 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
Of course, another way to look at these forecasts is to place them into context against the industry itself. One thing that stands out from these estimates is that revenues are expected to keep falling until the end of 2024, roughly in line with the historical decline of 8.7% per annum over the past five years. Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 1.9% annually. So while a broad number of companies are forecast to grow, unfortunately Lumen Technologies is expected to see its revenue affected worse than other companies in the industry.
The Bottom Line
The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. Still, earnings are more important to the intrinsic value of the business. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Lumen Technologies' future valuation.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Lumen Technologies going out to 2026, and you can see them free on our platform here.
You can also view our analysis of Lumen Technologies' balance sheet, and whether we think Lumen Technologies is carrying too much debt, for free on our platform here.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.