Why Lumen Technologies Gained 18% After Q3 2024 Report

Summary:

  • Lumen Technologies’ Q3 results showed a revenue decline but a significant increase in free cash flow, driven by strong private connectivity fabric (PCF) sales.
  • The stock rallied 18% post-earnings, with a “Hold” quant rating, despite previous “Strong Buy” recommendations, due to positive cash flow and AI infrastructure opportunities.
  • Lumen’s business model transformation is validated by increased FCF projections and substantial PCF deals, positioning it well for future growth and debt reduction.
  • Discussion of short-term buying risks and long-term gains from AI-related infrastructure investments discussed.
Equipment in server room

Erik Isakson

After Lumen Technologies (NYSE:LUMN) posted its quarterly earnings report in the summer, the stock returned nearly 25%. On November 5, after Lumen posted a revenue decline in its third-quarter results, the stock gained around 18% at the time of writing.

Metric

Current Outlook

Previous Outlook

Adjusted EBITDA

$3.9 to $4.0 billion

$3.9 to $4.0 billion

Free Cash Flow

$1.2 to $1.4 billion

$1.0 to $1.2 billion

Net Cash Interest

$1.15 to $1.25 billion

$1.15 to $1.25 billion

Capital Expenditures

$3.1 to $3.3 billion

$3.1 to $3.3 billion

Cash Income Taxes/(Refund)

($200) to ($300) million

($200) to ($300) million


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