Is Lumen Technologies, Inc. (LUMN) the Best Growth Stock to Buy Now Under $25?

Lumen Technologies, Inc. (LUMN) has been making waves in the telecommunications industry, with its stock price surging over 100% in 2024. As the company continues to operate with a negative price-to-earnings (P/E) ratio, investors are left wondering if LUMN is a steal or a risky bet. Let's dive into the facts and expert opinions to determine if Lumen Technologies is the best growth stock to buy now under $25.



Lumen Technologies' recent stock price surge can be attributed to its strategic partnerships with major tech giants, such as Microsoft Corporation and Corning Inc. These partnerships have driven demand for Lumen's high-speed fiber-network solutions, as tech companies seek increased connectivity between their data centers. Additionally, Lumen's strong operational progress and sales momentum across its growth portfolio, including a record quarter for net subscription adds in its Quantum Fiber business, have contributed to the company's stock price appreciation.



However, Lumen Technologies' net income losses and declining revenue growth raise concerns about the company's financial stability. Over the past three months, LUMN's revenue growth has declined by approximately -10.73%, lagging behind its industry peers. The company's net margin of -1.5% and return on equity (ROE) of -10.1% also indicate potential challenges in maintaining profitability and efficiently utilizing equity capital.



Despite these challenges, Lumen Technologies' undervalued status, as indicated by its Price-to-Sales (PS) ratio of 0.4x compared to the peer average of 5.9x and the US Telecom industry average of 1.3x, suggests that the company's stock price may not fully reflect its underlying value. Additionally, Lumen's strong net margin and return on assets (ROA) of -0.15% demonstrate the company's effective utilization of assets and strong financial performance.

Analysts have weighed in on Lumen Technologies' stock price, with nine research firms giving the stock an average recommendation of 'educe' (three 'ell' and six 'hold'). Analysts also do not expect the stock price to rise much in the next year. However, Citigroup raised its target price from $6.50 to $8.00, maintaining a 'Neutral' rating on the stock.