Lumen Technologies (LUMN) has reported a surprising uplift in its Q4 2024 results, particularly in the Public Sector and Wholesale segments, though some gains were one-time. Citi maintains a "Neutral/High Risk" rating, with a target price of $8, based on a sum-of-parts valuation. The report highlights Lumen's strategic focus on monetizing fiber and Mass Markets assets, alongside improving its balance sheet through upfront IRUs. However, Citi notes, "The underlying business segment results are becoming more complicated to evaluate with a growing contribution from non-cash deferred revenue amortization."
Citi's model adjustments reflect better-than-expected cash receipts from PCF sales and updated EBITDA outlooks for 2025 and 2026, considering investments in PCF builds and cloud initiatives. The report also acknowledges Lumen's strategic move to migrate enterprise customers to its multi-cloud hub, posing potential competition to retail data centers like EQIX and DLR.
Lumen's current stock price is $5.59, up 10.91% from the previous close.