MW Lumen's stock got little love from Wall Street analysts. That's now changing.

By Emily Bary

Lumen's stock is rising after a bullish upgrade at Citi

As Lumen Technologies Inc. shares soared last year on artificial-intelligence deals, sell-side analysts neglected to get in on the party.

Lumen's stock (LUMN) ended up nearly tripling over the course of 2024, but only one analyst held a buy rating during the summer, and none had buy ratings as of the end of the year, according to FactSet data.

Now, however, one analyst from a major U.S. bank is ready to make a bullish call on the telecommunications name. Citi Research analyst Michael Rollins upgraded Lumen's stock to buy from neutral on Tuesday, cheering "four potentially positive catalysts over the next year." (FactSet shows that of the 15 analysts now covering Lumen shares, an analyst from Haitong International Research also has a bullish rating.)

The stock is up 9% in morning action Wednesday.

Wall Street once worried about Lumen's ability to deal with its massive debt as it faced steep challenges in its legacy telecommunications businesses. But the company began reviving its business last year as it used its networking infrastructure to ink deals with AI companies that needed to connect their data centers.

Lumen has already announced $8.5 billion in business for what it calls Private Connectivity Fabric, "and recent commentary from management has left the door open to an update as soon as the [first-quarter] earnings season with another $3.5 [billion] remaining within the initial target," Citi's Rollins wrote.

He also noted that Lumen may look to monetize some of its fiber assets, with recent media reports indicating this idea is on the table. Rollins values Lumen's mass-market assets at $7 billion to $10 billion after taxes, or $5.5 billion to $7.5 billion when specifically looking at fiber assets. The market for fiber businesses has been hot, as evidenced by Frontier Communications Parent Inc.'s (FYBR) announced sale to Verizon Communications Inc. $(VZ)$ last year.

Read: A Lumen executive talks AI, Verizon's fiber deal - and meme-stock status

Rollins is also upbeat about the company's cost-cutting opportunity. "Lumen is pursuing an overdue integration of past business segment acquisitions and remains on track to reduce annual costs by about $1 [billion], although this does include cost benefits from legacy revenue erosion," he wrote.

And while the company's legacy businesses are still feeling the crunch, Rollins sees room for Lumen to turn things around, particularly in the business segment, which serves enterprise and commercial customers.

"While this is likely to take time, opportunities to improve Grow revenue during 2025 on the heels of improving sale commentary could be a positive leading indicator," he wrote. Lumen categorizes its businesses into three areas, with Grow encompassing things like dark fiber and edge-cloud services that have expansion potential.

-Emily Bary

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February 26, 2025 11:35 ET (16:35 GMT)

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