Goldman Sachs assumes coverage on Lumen stock with Neutral rating

Goldman Sachs initiated coverage on Lumen Technologies (LUMN) with a Neutral rating and a $4.10 price target, citing low conviction due to ongoing revenue declines and management's 2029 target for positive revenue growth. Despite this cautious outlook, Lumen reported a narrower-than-expected Q2 2025 loss and is actively executing a multi-step business turnaround focused on enterprise services, including the proposed sale of its consumer fiber business, strategic network expansion for AI/multi-cloud, and growth in its Network-as-a-Service platform, aiming to reverse its top-line trajectory.

Analysis

Goldman Sachs has initiated coverage on Lumen Technologies (LUMN) with a 'Neutral' rating and a $4.10 price target, which is below its current trading price of $4.97. The bank's cautious stance is rooted in 'low levels of conviction' due to Lumen's ongoing revenue declines, with management not projecting a return to positive revenue growth until 2029. This long-term turnaround horizon overshadows recent positive developments. While Lumen reported a narrower-than-expected Q2 2025 loss per share of $0.03 versus an anticipated $0.25 loss, its revenue of $3.09 billion slightly missed forecasts, reinforcing concerns about top-line pressure. The company is actively pursuing a multi-faceted turnaround, including the proposed sale of its consumer fiber business, de-leveraging, and enhancing its enterprise go-to-market strategy. Key initiatives aimed at future growth include expanding high-speed connectivity for AI and multi-cloud clients, and growing its Network-as-a-Service platform, which recently surpassed 1,000 customers. The market awaits the February 2026 Investor Day for greater clarity on revenue trajectory, cost transformation, and capital allocation.

Key Decisions for Investors

• Given the conflicting signals of a significant bottom-line earnings beat versus persistent top-line revenue declines, a neutral or hold position appears prudent while monitoring execution of the turnaround strategy.
• The February 2026 Investor Day should be viewed as a critical catalyst, as any positive revisions to the 2029 revenue growth timeline or concrete details on capital allocation could significantly alter the investment thesis.
• Investors should closely track quarterly revenue figures, as a failure to stabilize and reverse declines would validate the core concern highlighted by Goldman Sachs and indicate the turnaround is not gaining sufficient traction.
• Note the valuation risk implied by Goldman's $4.10 price target, which sits below the current market price and suggests potential downside if market sentiment aligns with the bank's more cautious view on the turnaround's timing.