Goldman Sachs has kept its Neutral rating and $7.25 price target on Lumen following the company’s latest quarterly report. The bank’s valuation sits below Lumen’s prevailing market price of $8.46, a gap that Goldman notes alongside InvestingPro data that labels the stock as currently overvalued despite a 67.9% total return over the past year.
In a research note, Goldman described the fourth-quarter results and guidance as broadly in line with expectations, and indicated the shares could trade higher even after an initial post-market dip. The firm singled out Lumen’s investor day on February 25 as a possible positive trigger, noting management plans to present a five-year outlook and additional details on the company’s ongoing transformation.
Goldman flagged a particular concern in the quarter: EBITDA missed expectations despite stronger-than-forecast cost savings. The note suggests that underlying assumptions leave the company’s 2026 guidance a touch below what Goldman's models anticipated. As a result, the bank retained its Neutral stance while awaiting additional confirmation that Lumen can stabilize or reverse its declining revenue trajectory.
The research note emphasized a narrow set of outcomes that would change Goldman’s view. Specifically, the firm said it will look for demonstrable evidence that Lumen’s AI-related customer wins translate into meaningful medium-term revenue growth and then flow through to improved longer-term EBITDA and free cash flow metrics.
InvestingPro figures included in the briefing show revenue fell 5.4% last year and that analysts are not expecting the company to return to profitability in 2026. Those trends sit alongside quarterly operational results released by Lumen, which reported a fourth-quarter EPS of $0.23 versus an expected -$0.26, an EPS surprise of 188.46%. Quarterly revenue came in at $3.041 billion, matching consensus, but represented an 8.7% year-over-year decline.
The company has also been active on the corporate front. Lumen completed a major transaction selling fiber assets to AT&T, a deal that prompted Raymond James to adjust its view on the stock from Outperform to Market Perform. Management turnover accompanied these strategic moves: Jeffery S. Sharritts has been named chief revenue officer, replacing Ashley Haynes-Gaspar, who will remain with the company through 2026 to support the transition.
Goldman’s Neutral rating reflects a wait-and-see posture centered on revenue stabilization and proof that AI engagements will materially improve the company’s cash-generative profile. The investor day on February 25 is framed as the next significant data point for investors and analysts assessing whether the recent operational and corporate changes will produce the anticipated financial recovery.
Key points
- Goldman Sachs reiterated Neutral and a $7.25 price target on Lumen; the target is below the current $8.46 share price.
- Investor day on February 25 is a potential catalyst where management will present a five-year plan and transformation details.
- Fourth-quarter EPS beat expectations while EBITDA missed; InvestingPro data shows revenue declines and no analyst expectation of profitability in 2026.
Risks and uncertainties
- Revenue contraction: Lumen reported a 5.4% decline last year and quarterly revenues fell 8.7% year over year, creating near-term revenue risk for the telecom sector.
- Execution on AI monetization: Goldman is waiting for proof that AI wins will drive medium-term revenue and longer-term EBITDA and free cash flow improvements, an uncertainty that affects investors focused on AI-driven telecom services.
- Strategic shifts and leadership changes: The sale of fiber assets to AT&T and a CRO transition could create operational and integration risk as the company refocuses its business model.