Lumen Technologies (LUMN): A Fresh Look at Valuation Following Q3 Earnings Beat and Strategic Partnerships

Lumen Technologies (NYSE:LUMN) just reported third-quarter 2025 earnings that surpassed forecasts for both revenue and free cash flow. Management highlighted digital transformation milestones, new enterprise service wins, and notable improvements to the balance sheet.

See our latest analysis for Lumen Technologies.

Lumen’s recent surge is hard to miss. The stock has delivered an impressive 174% share price return over the past 90 days, fueled by transformative partnerships, bold enterprise initiatives, and a sharpened focus on digital infrastructure. While short-term momentum is strong, longer-term total shareholder returns signal that Lumen is still recovering and reinventing itself for future growth.

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The recent results and surging momentum raise a key question for investors: does Lumen’s turnaround story mean this stock is still trading at a discount, or is the market already anticipating the next phase of its growth?

Most Popular Narrative: 95% Overvalued

With Lumen Technologies’ narrative fair value at $5.28 per share and the last close at $10.28, the most widely followed view sees Lumen's valuation running far ahead of fundamentals in light of recent gains.

Strategic refinancing, deleveraging, and the pending sale of the consumer fiber-to-the-home business to AT&T will materially strengthen Lumen's balance sheet, reduce interest expense by $300 to $400 million annually, and free up capital for enterprise-focused growth initiatives, directly impacting future net earnings and free cash flow.

Read the complete narrative.

Think those partnership wins are what’s powering this narrative? Look closer. The real story centers on bold cost-cutting, a business pivot, and massive cash flow shifts. Find out the surprising forecast embedded in the most followed narrative; analyst assumptions that could make or break the current price move.

Result: Fair Value of $5.28 (OVERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent declines in legacy revenues or setbacks in executing cost savings could quickly challenge the optimism that is currently driving Lumen’s valuation narrative.

Find out about the key risks to this Lumen Technologies narrative.

Another View: Discounted Cash Flow Perspective

While the market and analysts see Lumen as overvalued using traditional pricing multiples, our SWS DCF model tells a different story. This approach estimates Lumen's fair value at $22.13 per share, which is well above its current market price. Could this indicate that growth and cash flow potential are being overlooked?

Look into how the SWS DCF model arrives at its fair value.

Build Your Own Lumen Technologies Narrative

Disagree with the consensus or want to dig in for yourself? You can jump in, review the numbers, and easily construct your own view in just a few minutes. Do it your way

A great starting point for your Lumen Technologies research is our analysis highlighting 2 key rewards and 3 important warning signs that could impact your investment decision.

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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.

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