Eric Luebchow, an analyst from Wells Fargo, assigned the Hold rating on Lumen Technologies (LUMN – Research Report). The associated price target is $1.75.
Eric Luebchow’s Hold rating for Lumen Technologies is a result of a mix of factors. The company’s recent Q3 report revealed a debt restructuring plan that, while improving its maturity stack, came with significant cost implications. In addition, Lumen’s revenue outlook appears to be weakening due to balance sheet concerns, casting doubts on a potential re-rating of its equity. The company has managed to negotiate with creditors to extend its debt maturities, securing additional financing to boost near-term liquidity, but at relatively high interest rates. Lumen’s credit risk seems to have affected both bookings activity and near-term revenue forecasts.
Despite these challenges, Lumen is taking steps to improve its financial position. These include a reduction in Quantum Fiber capex and a cost-cutting initiative which includes a 4% workforce reduction aimed at achieving significant cost savings. The company also anticipates a substantial tax refund in late 2023 or early 2024 due to accelerated NOLs. However, Lumen’s free cash flow outlook remains uncertain, with expectations of it turning negative in 2024 before a potential recovery in 2025. To summarise, Eric Luebchow’s Hold rating is founded on Lumen’s challenging equity story, marked by the impact of debt restructuring and weakening near-term fundamentals.
Luebchow covers the Real Estate sector, focusing on stocks such as American Tower, Cubesmart, and Crown Castle. According to TipRanks, Luebchow has an average return of -2.5% and a 39.81% success rate on recommended stocks.
In another report released on October 31, TD Cowen also maintained a Hold rating on the stock with a $5.00 price target.
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Lumen Technologies (LUMN) Company Description:
Lumen Technologies is a technology and communications company focused on providing business and mass markets customers. It offers public and private cloud solutions, Colocation and Data Center Services, IT solutions, Unified Communications and Collaboration, Content Delivery, and Managed Security Services. Lumen operates through three brands, including its flagship brand Lumen targeting the enterprise and wholesale markets. Further, it provides fiber-based services to residential and small business customers via the Quantum Fiber brand. Moreover, it focuses on the mass market through its CenturyLink brand.
Read More on LUMN:
- Lumen Completes Sale of EMEA Business to Colt Technology Services for $1.8B
- Lumen announces broad agreement with creditors for $1.2B of financing
- Lumen backs FY23 adjusted EBITDA view $4.6B-$4.8B
- Lumen reports Q3 adjusted EPS (9c), consensus 6c
- Lumen Technologies options imply 11.1% move in share price post-earnings
