Lumen: Attractive Speculative Setup (Rating Upgrade)

Summary:

  • Lumen Technologies has improved its recovery prospects by extending debt maturities and by confirming a positive free cash flow forecast for the current year.
  • The company’s broadband business, particularly fiber, is experiencing strong momentum and contributing significantly to revenue.
  • Lumen’s success in pushing out maturities has caused a stabilization of the telecom’s share price.
  • At 6.5X FCF, at the mid-point of guidance, I see a promising risk profile for speculative investors.

Fiber Glass Algorithm

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One reason I recommended to sell Lumen Technologies (NYSE:LUMN) last year was that the telecommunications company burned through a considerable amount of its equity as it repositioned its business and sold off assets. However, most recently, Lumen has managed to


Analyst’s Disclosure: I/we have a beneficial long position in the shares of LUMN, T, VZ either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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