Lumen Technologies (LUMN): Valuation Insights Following Network Upgrades and New AI Leadership

Lumen Technologies (LUMN) is making headlines, and investors are paying attention. The company has just rolled out strategic upgrades to its sprawling U.S. network, enabling high-speed cloud connectivity with up to 400Gbps services across more than 70 data centers in key metro markets. In addition, Lumen announced the hire of Sean Alexander, a former Microsoft AI executive, to lead efforts in building out new customer-focused, AI-driven initiatives. These consecutive moves signal a more aggressive push into the fast-growing cloud and multi-cloud networking space, where demand for scalable, secure infrastructure is only rising.

With these announcements, Lumen’s stock has perked up, climbing about 6% in the past month and nearly 15% over the past 3 months, after what has otherwise been a tough year. The longer-term picture is more challenging, with the stock still down 25% over the past 12 months. However, with last week’s network expansion and the recent executive hire, momentum appears to be shifting, or at least prompting some investors to reconsider the company’s near-term prospects.

After years of underperformance and with signs of a turnaround emerging, is Lumen Technologies setting the stage for a bigger run, or are investors already factoring in the growth story?

Most Popular Narrative: 4.5% Undervalued

According to the community narrative, Lumen Technologies is viewed as slightly undervalued, with its fair value pegged just above the current trading price. This modest discount reflects both optimism about transformative initiatives and recognition of the company’s ongoing operating challenges.

“Refocusing on enterprise and digital segments, backed by AI-driven infrastructure and platform contracts, positions the company for margin expansion and sustained long-term earnings growth. Financial restructuring, asset sales, and targeted partnerships bolster network modernization, capitalize on data growth, and support commercial reach in high-demand connectivity solutions.”

Curious about what is fueling these bullish expectations? The secret sauce behind this narrative involves major shifts in business strategy and some bold financial projections that could reshape Lumen’s future. Still, it all depends on a few critical numbers and assumptions. What is it that makes this scenario both exciting and controversial? Discover the details that tip the scales on this valuation.

Result: Fair Value of $4.83 (UNDERVALUED)

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

However, ongoing declines in legacy revenues and heavy reliance on a few large customers remain significant risks that could disrupt Lumen's anticipated turnaround.

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

Another View: Discounted Cash Flow Model

Our DCF model presents a much less optimistic picture, suggesting that Lumen Technologies may actually be overvalued based on projected cash flows. With these two methods delivering very different perspectives, the question remains: which one truly reflects Lumen's outlook?

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

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Lumen Technologies for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Lumen Technologies Narrative

If you see things differently, or want to dig into the numbers yourself, you can take a few minutes to shape your own perspective. do it your way.

A great starting point for your Lumen Technologies research is our analysis highlighting 1 key reward and 2 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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