Reasons Behind Lumen's Stock Surge This Week
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Aug 31 2025
0mins
Should l Buy LUMN?
Source: Fool
Lumen Stock Performance
- Recent Gains: Lumen's stock experienced a significant increase of 7.8% this week, recovering from previous declines and reducing its year-to-date stock slide to 6.4%.
- Contract with Pac-12: The surge in stock price was largely attributed to a new contract with Pac-12 Enterprises, where Lumen will provide network-as-a-service (NaaS) technologies for streaming college sports games.
Financial Outlook
- Stock Decline: Despite the recent gains, Lumen's stock is still down approximately 52% from its three-year high.
- AI and NaaS Growth: The company has seen notable growth periods, particularly after securing contracts with major players like Meta Platforms and Microsoft for Private Connectivity Fabric (PCF) technologies aimed at supporting AI infrastructure.
Earnings and Cash Flow
- Q2 Report: Lumen's second-quarter report revealed weaker-than-expected sales and earnings, leading to a sell-off in stock.
- Increased Cash Flow Target: Despite the disappointing earnings, Lumen raised its full-year free cash flow (FCF) target to between $1.2 billion and $1.4 billion, up from a previous estimate of $700 million to $900 million. This increase is partly due to accelerated execution on an $8.5 billion PCF deal, indicating positive momentum for the company.
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Analyst Views on LUMN
Wall Street analysts forecast LUMN stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for LUMN is 8.33 USD with a low forecast of 7.00 USD and a high forecast of 11.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
6 Analyst Rating
0 Buy
5 Hold
1 Sell
Hold
Current: 6.230
Low
7.00
Averages
8.33
High
11.00
Current: 6.230
Low
7.00
Averages
8.33
High
11.00
About LUMN
Lumen Technologies, Inc. is a networking company, which connects people, data, and applications quickly and securely. The Company is engaged in providing an array of integrated products and services to its domestic and global business customers and its domestic mass market customers. It operates through two segments: Business segment and Mass Markets segment. The Company conducts its operations under four brands: Lumen, which is its flagship brand for serving the enterprise and wholesale markets, including its Private Connectivity Fabric (PCF) network architecture, Lumen Digital products, and its priority services including Edge, Network-as-a-Service and cybersecurity; Quantum Fiber, which provides fiber-based broadband services to residential and small business customers; CenturyLink, which is engaged in providing primarily mass-marketed copper-based communications services, and Black Lotus Labs, which is its cyberthreat research and intelligence arm.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Enhanced Dividend Payment Capacity: With a payout ratio slightly above 50%, the upcoming profit improvements will bolster AT&T's ability to maintain dividend payments and may pave the way for the resumption of annual dividend increases that were suspended in 2022.
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- Fiber Expansion: AT&T plans to increase its fiber service coverage from 32 million to 40 million customer locations by the end of 2026, representing a 25% year-over-year growth that will significantly enhance its market share and competitive position.
- Customer Growth Potential: The addition of 8 million new users is expected to boost AT&T's fiber customer base from 10.6 million to 13.6 million, translating to a 30% increase that could generate nearly $3 billion in annual revenue, alleviating pressures from a saturated wireless market.
- Earnings Outlook Improvement: The CFO projects adjusted EPS to range between $2.25 and $2.35 in 2026, with a double-digit CAGR expected over the next three years, indicating growth potential even in a highly competitive market.
- Dividend Payment Capacity Enhancement: With improving profits, AT&T's dividend payout ratio is slightly above 50%, which may allow for the resumption of annual dividend increases that were suspended in 2022, attracting more income-focused investors.
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- Fiber Expansion: AT&T aims to increase its fiber service coverage from 32 million to 40 million customer locations by the end of 2026, representing a 25% year-over-year growth that significantly enhances its competitive position in a saturated market.
- Customer Growth Potential: The addition of 8 million new users is expected to boost broadband customers from 10.6 million to 13.6 million, a 30% increase that will further drive revenue, especially given the saturation in the wireless market.
- Revenue Expectations: With fiber customers averaging $73 per month, this could translate into nearly $3 billion in additional annual revenue, strengthening AT&T's profitability and ability to sustain dividend payments.
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See More
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- Financial Outlook: While the fourth-quarter adjusted earnings per share exceeded expectations, revenue only met them, with management projecting full-year free cash flow between $1.2 billion and $1.4 billion, including $300 million to $450 million in non-recurring tax refunds.
- Debt Management: Lumen successfully reduced its debt burden by selling its consumer-focused fiber-to-the-home business for $4.8 billion, bringing its debt-to-EBITDA ratio down to 3.8 times, although overall revenue and profit growth remains a critical focus.
See More
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See More
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