Lumen Technologies (LUMN) maintains a "Neutral/High Risk" rating from Citi, with a target price of $8, reflecting a strategic focus on expanding its addressable market through connectivity services and potential asset sales. The recent meeting with Lumen's CFO and SVP of IR highlighted the company's efforts to modernize its product offerings and streamline operations, aiming for a $1 billion annual cost reduction. Lumen is exploring the sale of its fiber assets, which could attract interest from major wireless carriers, potentially aiding in debt reduction and strategic realignment.
Citi's valuation of LUMN at $8 per share is based on a blend of DCF, FV/EBITDA, and scenario analysis, with a projected EBITDA growth rate of 12% from 2025 to 2028. The company faces challenges, including revenue pressures and high financial leverage, but sees opportunities in the growing demand for fiber and connectivity services. "Lumen believes that it can benefit from inferencing as large enterprises begin to consume data in a more comprehensive way," according to Citi.
Lumen's current stock price is $5.38 as of January 14, 2025.