Operating Performance Remains Poor at Lumen and Dividend Cut Hits Stock, but It Remains Too Cheap

Lumen’s third quarter was generally not good, mainly because revenue declines remain steep. The firm also finally announced it was eliminating its outsize dividend, and it announced another divestiture—this time its Europe, Middle East, and Africa business. While we are lowering our $16 fair value estimate to $14, we maintain that the company is on solid financial footing and is worth significantly more than where the stock is currently trading, even if it never achieves the return to growth that management expects.