Reasons Behind Lumen's Stock Surge This Week
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Aug 31 2025
0mins
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 fall 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: 8.930
Low
7.00
Averages
8.33
High
11.00
Current: 8.930
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.
Analysis of Insider Buying in Small-Cap ETF
- Insider Buying Ratio: Within the iShares S&P Small-Cap 600 Value ETF, 10.2% of holdings have seen insider buying in the past six months, indicating management's confidence in future growth, which may attract more investor interest.
- Lumen Technologies Activity: Lumen Technologies, comprising 0.63% of the ETF, has had 2 directors and officers purchase shares recently, reflecting a positive outlook from insiders that could bolster market confidence in its stock.
- California Resources Transactions: California Resources Corp, ranked 27th in the ETF with approximately 0.54% allocation, also saw 2 directors and officers file for recent stock purchases, suggesting a proactive stance from its governance team that may enhance investor trust.
- ETF Asset Allocation: The total holdings of LUMN and CRC in the iShares S&P Small-Cap 600 Value ETF are valued at $46,399,924 and $40,312,778 respectively, highlighting their significance in the ETF's investment strategy, which could influence overall investment decisions.
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AT&T Acquires Lumen's Fiber Business for $5.75 Billion
- Acquisition Scale: AT&T agreed to acquire Lumen's fiber business for $5.75 billion last year, which is expected to add 4 million passed locations and 1 million subscribers, significantly expanding its fiber network and enhancing market competitiveness.
- Integration Cost Impact: AT&T anticipates a $0.05 reduction in adjusted earnings per share in 2026 due to integration costs and additional interest expenses, indicating short-term financial pressure but substantial long-term revenue potential.
- Customer Penetration Opportunity: With Lumen's customer penetration rate at 25%, AT&T has the potential to add approximately 600,000 new customers by improving penetration, further solidifying its market position.
- Cash Flow Growth Outlook: Despite high initial costs, AT&T expects free cash flow to reach at least $21 billion by 2028, demonstrating the strategic value of the Lumen acquisition for long-term growth.
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