UBS analysts updated their estimates on Lumen Technologies Inc, the third-largest phone company in the US, following Lumen’s investor day, where management laid out their strategy for returning to growth in 2025 and beyond.
“While we believe Lumen has room to take share and long-term guidance is ahead of UBS and Street estimates, we await evidence of execution given challenges to the wider enterprise market,” they wrote.
In a note to clients, the analysts stated that they expect secular pressure to keep declines elevated near term and then anticipate a gradual recovery.
As a result, the analysts at UBS dropped their 12-month target price on Lumen Technologies stock to $2.50 per share from $5 previously, while maintaining a ‘Neutral’ rating pending further visibility on topline/earnings before interest, taxes, depreciation and amortization (EBITDA) stability.
They shifted their price target methodology to 10 times free cash flow, in line with Lumen’s and the telco sector’s long-term average and equating to 4.9 times EBITDA, down slightly from their prior price target based on approximately 5 times EBITDA.
Shares of Lumen Technologies fell 6% to $2 in late-afternoon trading on Wednesday and have plunged more than 62% in the year to date.
Contact Sean at sean@proactiveinvestors.com