Lumen Technologies (LUMN) Stock Forecast & Price Target

Lumen Technologies reported revenue of $3,087 million, which exceeded consensus estimates by approximately 1.5%, driven by a robust 11% year-over-year growth in the public sector and notable increases in fiber broadband revenue, which rose 18.4% and now accounts for 49% of total broadband revenue. The company experienced significant growth in its North American enterprise channels, with a 10.5% increase in the "Grow" revenue bucket, which includes dark fiber and connectivity solutions that make up 50% of total enterprise revenue in the region. Lumen's successful transition to enterprise services is underscored by its NaaS platform, which now serves over 1,500 enterprise customers, and substantial interest savings totaling approximately $235 million year-to-date, reflecting improved financial efficiency and positioning for future growth.

Lumen Technologies reported a 3.2% year-over-year decline in business segment revenue, despite strong performance in the public sector and large enterprise segments, indicating ongoing challenges in its core operations. The company's guidance indicates expectations for continued organic revenue declines similar to those experienced in Q3 2024, accompanied by significant transformation costs aimed at achieving $1 billion in expense reductions by 2027. Additionally, while adjusted free cash flow exceeded consensus estimates, the firm's reliance on timing in payment collections raises concerns about the sustainability of its financial performance in the face of declining fiber penetration and the ongoing transition from legacy services.