Why Lumen Technologies Rallied This Week

Key Points

• Lumen unveiled its new RapidRoutes product this week.

• CEO Kate Johnson also spoke at the Goldman Sachs Communacopia Conference.

• She projects a return to growth by 2029.

• 10 stocks we like better than Lumen Technologies ›

Shares of enterprise network giant Lumen Technologies (NYSE: LUMN) rallied this week, up 29.3% as of 2:45 p.m. ET on Friday.

Lumen has been battered in recent years, due to falling revenue and a high debt burden. However, the stock has recovered from its lows, as artificial intelligence (AI)-related networking deals and some new product announcements have lifted hopes for a turnaround.

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Lumen's week of good news and projections

On Sept. 9, Lumen put out a press release describing its new RapidRoutes product, which enables enterprises to provision and scale network services within 20 days. That's a big change from the traditional process, which can typically take months. Lumen's enterprise connections can now reach up to 400 gigabytes per second, with connectivity to 125 cloud on-ramps.

Then on Wednesday, CEO Kate Johnson participated in the Goldman Sachs Communacopia Technology Conference 2025. During her session, she made a couple of points that likely lifted the spirits of investors.

The most important point may have been her projection for a return to segment revenue growth in 2028, and then full company revenue growth in 2029. A key milestone will come next year, when Johnson says the company's "Grow" business segment will overtake the "Nurture," "Harvest," and "Other" business segments.

Meanwhile, Johnson said the company was on track to save $1 billion in costs by 2027, and that she expects adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) margins to expand by about 20% to the mid-30% range, up from 28.4% last quarter.

Image source: Getty Images.

Lumen's recent efforts are admirable, but questions remain

Lumen's stock continues to be under pressure from declining revenues and a high debt load, which will reach 3.9 times EBITDA after the sale of its consumer business.

While Johnson's confident projection gave the stock a lift this week, risks will remain high until the company is firmly on a profitable growth path. It appears that won't happen until 2029, although tangible progress toward that goal could potentially lead to interim upside.

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Billy Duberstein and/or his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Goldman Sachs Group. The Motley Fool has a disclosure policy.