stock sank to levels not seen in decades after the telecommunications company posted strong earnings, but told investors to expect a smaller profit than they had anticipated for this year.
Lumen (ticker: LUMN) posted fourth-quarter diluted earnings of 43 cents a share, while analysts had been expecting 19 cents a share, according to FactSet. For all of 2023, the company told investors to expect adjusted earnings before interest, taxes, depreciation, and amortization of $4.6 billion to $4.8 billion.
The consensus call among analysts was for a profit of almost $5 billion. Investors weren’t pleased: Shares of Lumen plummeted 20% to $3.98.
That put the stock on pace for its lowest close since August 1988, when it closed at $3.90. It was the worst performer in the
as of Wednesday morning, according to Dow Jones Market Data.
Raymond James analyst Frank Louthan, who maintained his Underperform rating on the stock in a research note Wednesday, wrote that “the guide is disappointing, but effectively a kitchen sink year as management tries to right-size the business.”
Louthan highlighted a change in leadership at Lumen—Kate Johnson was appointed as president and chief executive officer last year—writing that she “is suggesting customer focus, simplifying the business, and exiting products that do not support long term growth.”
Management has its eyes on integrating its IT systems as well as making other changes to its products—all of which will take time to work through, Louthan said.
“We agree that there are products, services, and sales approaches that need fixing, but this action definitely slows the growth of the organization while it is underway,” he wrote. “There isn’t a good way around it, but we would caution investors in believing that the turnaround can materialize before 2024 based on this alone.”
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