Lumen: Investor Day Can’t Offer What Investors Need—Proof the Return to Growth Can Actually Occur

Lumen’s investor day provided a bit more granularity into management’s plan to return the business to growth and some specificity on the multiyear financial forecast. More broadly, however, there was no change to the narrative that a turnaround will occur in 2025 and the firm can be a long-term grower despite the continuing decline of the firm’s sizable and profitable legacy businesses. We have no doubt that Lumen’s stock is extraordinarily undervalued if management can achieve anything close to what it projects, but with a large debt maturity looming in 2027, the question remains whether Lumen will find credit available to roll over the debt. Here again, if management is close to its projections, we think debt refinancing in 2027 will be no problem. However, after years of hearing similar narratives under past management teams, we believe only results will comfort investors, meaning there’s no substitute for time when contemplating what could calm the market. We are maintaining our $5 fair value estimate.