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On Friday, Citi analysts adjusted their outlook on Lumen Technologies stock (NYSE:LUMN), lowering the price target to $6.00 from the previous $6.50. Despite the reduction, they maintained a Buy rating on the company’s shares. The move came after Lumen reported financial outcomes that surpassed expectations, particularly in its business segment revenue, which showed a notable 10% year-over-year increase in strategic growth product revenues. According to InvestingPro data, Lumen currently generates annual revenue of $13.11 billion, though six analysts have recently revised their earnings expectations downward for the upcoming period.
The analysts noted that Lumen’s EBITDA performance exceeded both their own forecasts and the consensus, and the company reaffirmed its full-year guidance for EBITDA and Free Cash Flow (FCF). The improvement was partly attributed to the company’s Public Sector vertical, which continued to build on its momentum from the fourth quarter. InvestingPro analysis reveals the company maintains a healthy EBITDA of $3.41 billion and boasts a strong free cash flow yield, though profitability remains a concern as indicated by negative earnings per share of -$0.06 in the last twelve months.
However, the analysts also observed that the legacy products within the harvest and nurture categories experienced accelerated erosion, potentially indicating a swifter shift to strategic services. Despite this, the analysts believe that Lumen has the potential to enhance its value over the next 12 months through various means, including incremental Projected Cash Flows (PCF) sales, potential monetization of its Consumer Fiber assets, expense reduction, and improved business segment performance. The company’s financial health shows some resilience, with InvestingPro data indicating liquid assets exceed short-term obligations with a current ratio of 1.21. Discover 10+ additional exclusive insights and detailed analysis in the Pro Research Report, available to InvestingPro subscribers.
In their commentary, Citi analysts expressed confidence in Lumen’s prospects, stating, "We maintain our Buy/H on LUMN, while trimming our forecast to $6.00 to reflect our longer-term estimate revisions." This statement underscores their positive outlook despite the adjustment to the price target.
Lumen Technologies has not publicly responded to the revised price target or the analysts’ comments at this time. The company’s stock performance following this updated guidance from Citi will be observed by investors and market watchers alike.
In other recent news, Lumen Technologies reported its first-quarter 2025 financial results, surpassing expectations. The company achieved an earnings per share (EPS) of -$0.13, which was better than the anticipated -$0.26. Additionally, Lumen’s revenue reached $3.18 billion, exceeding the forecasted $3.12 billion. Despite a 3.3% year-over-year decline in total revenue, Lumen’s strategic innovations and partnerships, such as the Lumen Connectivity Fabric and collaboration with Google (NASDAQ:GOOGL) Cloud, are aimed at strengthening its market position. The company is targeting significant cost reductions and EBITDA growth by 2026, reaffirming its 2025 EBITDA guidance of $3.2 to $3.4 billion. Lumen Technologies’ stock received a positive market reaction following the earnings announcement, reflecting investor confidence in its strategic direction. The company also highlighted its focus on expanding its fiber network and achieving $1 billion in expense reductions by 2027. Analyst firms, Moody’s and S&P Global, have recognized Lumen’s efforts with recent credit rating upgrades.
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