What Happened?
Shares of telecommunications infrastructure company Lumen Technologies (NYSE: LUMN) jumped 9.4% in the morning session after the company announced a collaboration with Palantir Technologies to integrate Palantir's artificial intelligence platforms into its business.
Lumen, which is transforming from a traditional telecom provider into a technology infrastructure company, will use Palantir's Foundry and Artificial Intelligence Platform (AIP) across its operations, finance, and technology functions. The partnership aims to streamline workflows, accelerate decision-making, and simplify complex legacy operations as Lumen modernizes its business to meet customer demand for multi-cloud, AI-ready services. In separate news, the company also announced plans for a debt offering of $425 million in new notes, intending to use the proceeds to redeem $373 million of existing, higher-interest notes.
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What Is The Market Telling Us
Lumen’s shares are extremely volatile and have had 47 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 2 days ago when the stock dropped 3% on the news that Goldman Sachs initiated coverage on the stock with a Neutral rating and a price target that suggests potential downside. The investment bank set a price target of $4.10 per share. This target was notably below the stock's recent trading price of $4.97, implying a potential decline of over 14%. In its note, Goldman Sachs cited "low levels of conviction" regarding Lumen's business turnaround efforts. The firm pointed to the company's ongoing revenue declines, with management not projecting a return to positive revenue growth until 2029. According to the bank, it would require "more confidence revenue can grow" before taking a more positive view on the shares.
Lumen is down 10.6% since the beginning of the year, and at $5.02 per share, it is trading 50.4% below its 52-week high of $10.12 from November 2024. Investors who bought $1,000 worth of Lumen’s shares 5 years ago would now be looking at an investment worth $466.08.
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