Raymond James Downgrades Lumen (LUMN) on Growth Concerns

Raymond James Adjusts Lumen's Rating to Market Perform

Raymond James has downgraded Lumen Technologies Inc. (NYSE:LUMN) from Outperform to Market Perform. The firm stated that while the company has successfully deleveraged, the primary focus has now shifted to restoring revenue growth, a milestone it believes is still two years from being achieved.

Overview of Lumen's Financial Position

Lumen has made significant strides in improving its balance sheet. The sale of its fiber assets to AT&T was a key strategic move that materially reduced the company's financial leverage. This transaction has successfully cut leverage by approximately one turn, bringing it to a more stable level below 4x.

Impact on Market Outlook

The downgrade reflects a shift in analyst perspective. With the benefits of deleveraging now largely priced into the stock, investors and analysts are now scrutinizing the company's ability to generate top-line growth. Raymond James's forecast suggests that patience will be required, as a return to consistent revenue increases is not expected in the immediate future, potentially tempering investor enthusiasm.

Summary

In conclusion, while Lumen is on a healthier financial footing after its asset sales, the path to renewed revenue growth presents a significant hurdle. The downgrade by Raymond James highlights this challenge, suggesting the market will be closely monitoring the company's performance and growth initiatives over the next couple of years.

FAQ

Q: Why did Raymond James downgrade Lumen Technologies?
A: The downgrade was based on the view that a return to revenue growth is still approximately two years away, even though the company's balance sheet has improved.

Q: What is the new rating for LUMN stock from Raymond James?
A: The new rating is Market Perform, a downgrade from the previous Outperform rating.

Source: Investing.com