Lumen Technologies (NYSE: LUMN) plunged in on Wednesday morning after Wells Fargo analyst Eric Luebchow downgraded the stock to a Hold from Buy. The analyst also slashed his price target to $8 from $12.50 on the stock.
Leubchow stated that after Lumen’s $10 billion divestitures of its ILEC and Latin American arms, the company’s “RemainCo” EBITDA is lower than expected.
The analyst estimates that RemainCo is likely to generate $1.35 billion in quarterly run-rate EBITDA this year.
Leubchow commented, “We still believe the management team is heading in the right direction, with improving enterprise sales, a more favorable business mix with RemainCo and a focus on consumer fiber-to-the-home.”
However, the analyst added, “But with ~20% or more downside risk in the event of a 50% dividend cut, we see a negative short-term catalyst in the next 3-6 months.”
Is LUMN a Good Stock to Buy?
Analysts are sidelined about LUMN with a Hold consensus rating based on three Holds and one Sell. The average price forecast for LUMN stock is $10 implying an upside potential of 38.5% at current levels.
