Lumen(US:LUMN) Zhi Tong Cai Jing·2026-01-08 10:57Core Viewpoint - Goldman Sachs maintains a "neutral" rating on Lumen Technologies Inc. and raises its 12-month price target from $5 to $5.5 [1] Financial Forecast and Recent Outlook - Goldman Sachs predicts Lumen's Q4 adjusted EBITDA will reach $806 million, slightly above the market consensus of $792 million; quarterly revenue is expected to be $3.02 billion, slightly below the consensus of $3.04 billion [2] - For the full year 2025, EBITDA is projected to be $3.4 billion, at the upper end of the management's guidance range of $3.2 to $3.4 billion, driven by cost control measures and improved performance in traditional business [2] - Free cash flow (FCF) for Q4 is expected to be -$435 million, with an annual FCF of $1.37 billion, aligning with the company's guidance of $1.2 to $1.4 billion; however, there is a downside risk due to potential delays in tax refunds from the U.S. federal government shutdown [2] - Goldman Sachs slightly lowers the FCF expectations for 2026-2027 due to anticipated higher interest rates for debt refinancing [2] 2026 Performance Guidance - Lumen's management expects 2026 EBITDA to exceed $3.5 billion, including a contribution of $200 to $250 million from the mass market business; excluding the impact of the $5.75 billion sale of consumer fiber assets to AT&T, EBITDA is still expected to exceed $3.2 billion [3] - Free cash flow for 2026 is projected at $1 billion, with significant tax expenses offsetting capital expenditure savings [3] 2026 Investor Day - Lumen plans to hold an Investor Day on February 25, 2026, which is seen as a key catalyst; management is expected to provide targets for EBITDA margins, interest expenses, and capital expenditures for the next five years [4] - The event will also disclose operational data for the PCF business and Lumen Digital, enhancing transparency regarding growth initiatives and the slowdown in traditional business [4] - If the asset sale to AT&T proceeds smoothly, management may announce a subsequent capital allocation framework, including increased investments in network infrastructure to support AI workload growth and strategic acquisitions in high-growth areas like AI security and edge computing [4]