Where Will Lumen Technologies Stock Be in 1 Year?

Core Viewpoint - Lumen Technologies has experienced a significant stock increase of 374% over the past year, primarily driven by a new AI infrastructure deal with Microsoft, despite a history of declining revenues and losses [2][6]. Company Overview - Lumen Technologies, formerly known as CenturyLink, is one of the largest wireline service providers in the U.S. and has focused on expanding its wireline business through mergers and acquisitions rather than entering the wireless market [2][4]. - The company has faced a decline in annual revenue for five consecutive years, with total revenue dropping from $20.71 billion in 2020 to $14.56 billion in 2023, reflecting a revenue growth decline of 17% in 2023 [5]. Financial Performance - Lumen's adjusted EBITDA margins have decreased from 41.8% in 2020 to 31.8% in 2023, and the company reported a net loss of $10.30 billion in 2023 [5][6]. - The company is expected to generate $5 billion in new contracts related to the AI connectivity market and is in discussions for an additional $7 billion in sales opportunities [7]. Future Outlook - Analysts predict Lumen's revenue will decline to $13 billion in 2024 and further to $12.4 billion in 2025, with expectations of a gradual recovery as the macro environment improves and AI contracts contribute to revenue [8]. - Lumen plans to accelerate spending to fulfill new AI data center deals, anticipating adjusted EBITDA to decline to between $3.9 billion and $4 billion in 2024 [9]. - The company has $18.4 billion in long-term debt and a debt-to-equity ratio of 70, but expects free cash flow to improve from negative $878 million in 2023 to a positive range of $1 to $1.2 billion in 2024 [10]. Market Position - Lumen's enterprise value stands at $23.4 billion, trading at 1.8 times this year's sales and 6 times its adjusted EBITDA, which is significantly lower than peers like AT&T and Verizon [11]. - The stock's future performance is likely to be influenced by developments in its AI-oriented businesses and the overall AI market, with potential for limited downside due to investor optimism but also capped upside due to ongoing losses and high debt levels [13].