Lumen Technologies, Inc. (NYSE:LUMN) Just Reported Earnings, And Analysts Cut Their Target Price

It's been a pretty great week for Lumen Technologies, Inc. (NYSE:LUMN) shareholders, with its shares surging 19% to US$1.45 in the week since its latest full-year results. It was a pretty bad result overall; while revenues were in line with expectations at US$15b, statutory losses exploded to US$10.48 per share. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Lumen Technologies after the latest results.

See our latest analysis for Lumen Technologies

Following the recent earnings report, the consensus from nine analysts covering Lumen Technologies is for revenues of US$13.4b in 2024. This implies a perceptible 8.0% decline in revenue compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 99% to US$0.15. Before this latest report, the consensus had been expecting revenues of US$13.4b and US$0.21 per share in losses. While the revenue estimates were largely unchanged, sentiment seems to have improved, with the analysts upgrading their numbers and making a very promising decrease in losses per share in particular.

The consensus price target fell 7.8% to US$1.77despite the forecast for smaller losses next year. It looks like the ongoing lack of profitability is starting to weigh on valuations. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Lumen Technologies, with the most bullish analyst valuing it at US$3.50 and the most bearish at US$1.00 per share. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would also point out that the forecast 8.0% annualised revenue decline to the end of 2024 is roughly in line with the historical trend, which saw revenues shrink 7.9% annually over the past five years Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 2.0% annually. So it's pretty clear that, while it does have declining revenues, the analysts also expect Lumen Technologies to suffer worse than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Lumen Technologies going out to 2026, and you can see them free on our platform here..

And what about risks? Every company has them, and we've spotted 1 warning sign for Lumen Technologies you should know about.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.