On Wednesday, Raymond (NS:RYMD) James maintained a Market Perform rating on shares of Lumen Technologies (NYSE:LUMN), noting the company's ongoing adjustments to its stock's short interest.
According to the firm, Lumen has experienced a recent increase in its short interest ratio by 53 basis points, mirroring a similar rise that occurred in September. This change has been attributed to the unwinding of the initial surge in interest driven by excitement around artificial intelligence (AI) earlier in the year.
The firm highlighted that despite Lumen's latest earnings report revealing additional wins in the AI sector, investor sentiment towards the company remains predominantly negative. The market appears to be cautious, with many investors considering the possibility of re-shorting the stock. This perspective comes after a period of heightened attention on Lumen due to its AI developments, which had previously led to a decrease in short interest during the summer.
The update from Raymond James suggests that while Lumen has reported positive developments in AI, these have not been sufficient to shift the overall market sentiment. The analyst's commentary indicates that the stock's performance is closely watched, with investors quick to react to any changes in the company's financial results or market position.
Lumen Technologies, which operates in the telecommunications industry, has been part of the broader conversation about the impact of AI on various sectors. The company's engagement with AI technology had initially sparked a rally in its share price, but the recent report suggests that the initial enthusiasm has waned.
In summary, Raymond James' stance on Lumen Technologies remains unchanged at Market Perform, with the firm pointing to the stock's volatility influenced by shifting investor attitudes towards the company's AI-related progress. Despite the additional AI wins reported in Lumen's recent earnings, the market's skepticism seems to persist, reflected in the increase in short interest.
In other recent news, Lumen Technologies reported a revenue of $3.22 billion for the third quarter, surpassing analyst expectations of $3.21 billion. However, the company reported an adjusted loss per share of $0.13, which fell short of analysts' projections of a $0.09 loss per share.
Despite a 12% YoY decline in total revenue, primarily due to the divestiture of its EMEA business, Lumen's North America Business segment and Mass Markets segment revenues fell 7% YoY to $2.44 billion and $685 million respectively.
On a positive note, the company reported a record quarter for net subscription adds in its Quantum (NASDAQ:QMCO) Fiber business. Lumen also generated a substantial free cash flow of $1.2 billion in Q3, a significant increase from $43 million in the same period last year.
In light of these recent developments, Lumen updated its full-year 2024 outlook, raising its free cash flow guidance to $1.2-$1.4 billion from the previous range of $1.0-$1.2 billion. However, the company continues to face challenges as its net loss widened to $148 million in Q3 from $78 million a year ago. Despite these challenges, Lumen maintains its adjusted EBITDA forecast of $3.9-$4.0 billion.
InvestingPro Insights
Recent data from InvestingPro sheds additional light on Lumen Technologies' (NYSE:LUMN) current market position. Despite the cautious sentiment noted by Raymond James, LUMN has shown a remarkable price performance, with a 476.52% total return over the past year and a 52.2% return in the last three months. This surge has brought the stock to trade at 97.19% of its 52-week high, aligning with the InvestingPro Tip that LUMN is trading near its 52-week high.
However, investors should note that this price rally comes amid challenging fundamentals. An InvestingPro Tip indicates that analysts anticipate a sales decline in the current year, which is corroborated by the reported 12.01% revenue decline in the last twelve months. Additionally, the company is not profitable over the last twelve months, with a negative P/E ratio of -8.79.
For those considering Lumen Technologies' stock, it's worth noting that InvestingPro offers 11 additional tips that could provide further insights into the company's financial health and market position. These additional tips could be particularly valuable given the stock's recent volatility and the market's evolving perception of Lumen's AI initiatives.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.