Lumen price target raised to $4.00 from $3.51 at BNP Paribas Exane

Investing.com - BNP Paribas (OTC:BNPQY) Exane raised its price target on Lumen (NYSE:LUMN) to $4.00 from $3.51 on Wednesday, while maintaining a Neutral rating on the telecommunications company’s stock. The stock, currently trading at $4.29, has shown remarkable momentum with a 333% return over the past year. According to InvestingPro analysis, Lumen appears to be trading above its Fair Value.

The research firm noted that Lumen remains optimistic about returning to growth in its Business segment, with artificial intelligence demand expected to drive its PCF business forward. This positive outlook comes despite anticipated headwinds in other areas of operation.

In the public sector segment, Lumen expects forced disconnects to accelerate compared to the first quarter, creating additional pressure on that business line. These disconnects represent a known challenge the company has been preparing to address.

Regarding the Mass Markets segment, Lumen anticipates that its consumer fiber deal with AT&T will close by the first half of 2026. The company plans to use proceeds from this transaction to reduce its debt load, addressing balance sheet concerns.

Lumen recently completed financial maneuvers to improve its position, including refinancing its term loan and issuing $2 billion in new 6.875% bonds. The company will use these proceeds to pay down higher-interest debt yielding over 10%, which is expected to reduce annual interest expenses by approximately $100 million.

In other recent news, Lumen Technologies announced that its subsidiary, Level 3 Financing, Inc., will sell $2 billion in First Lien Notes due 2033. This marks a $1 billion increase from the previously announced offering size, with plans to use the proceeds to redeem existing notes due in 2029 and 2030. Additionally, Lumen Technologies is set to sell its Mass Markets fiber business to AT&T for $5.75 billion, a deal expected to close in the first half of 2026. This acquisition will transfer about 1 million fiber customers and infrastructure across 11 states to AT&T, enhancing its fiber network coverage.

In corporate governance updates, Lumen Technologies held its Annual Meeting, where shareholders approved several key proposals, including a reverse stock split and amendments to the company’s Articles of Incorporation. The company also announced the addition of two new board members, Michelle J. Goldberg and Steve McMillan, who bring expertise in technology and finance. Meanwhile, Level 3 Financing plans a $1 billion offering to refinance debt, extending the maturity date to 2033. These developments reflect Lumen’s ongoing strategic adjustments and financial maneuvers.

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