Expert Analysis Suggests Lumen Technologies Is a Discounted Buy

LUMN stock - Expert Analysis Suggests Lumen Technologies Is a Discounted Buy

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Although Lumen Technologies (NYSE:LUMN) isn’t having the greatest start this year — down 11% on a year-to-date basis — industry experts forecast sizable growth in the content delivery network (CDN) sector, one of Lumen’s main specialties. Should the narrative pan out, LUMN stock could make a comeback, thus justifying further research.

According to research firm MarketsandMarkets, it recently projected that the global CDN segment could grow from its estimated $19.2 billion valuation this year to $34.5 billion by 2027, representing a compound annual growth rate (CAGR) of 12.5%. Part of the reason for the bullish call is the introduction of various key players creating a “competitive and diverse market.”

Another catalyst that could play into the hands of LUMN stock is the coronavirus pandemic. Due to the societal impact of Covid-19, large swathes of the domestic and global workforce have been physically distributed, incentivizing innovations such as CDNs to bring data closer to the sources of demand. While that’s not an exclusive benefit for Lumen, the company levers an enviable track record, thus attracting some of the biggest enterprise-level clients.

To be fair, its last earnings report for the fourth quarter of 2021 left some investors wanting more. True, Lumen delivered net income of $508 million, contributing to a profit of $2 billion for 2021. At the same time, growth last year slipped compared to 2020’s result, coming in at $19.7 billion versus $20.7 billion. As well, in Q4, Lumen posted $4.85 million on the top line, which was down more than 5% against the year-ago quarter.

While the market has responded to the fiscal concerns with red ink on the charts, it’s possible that other growth narratives such as smart cities, autonomous driving initiatives and augmented-reality-based commerce could shift momentum in the positive direction. With no shortage of relevant opportunities, LUMN stock is one tech-based idea to keep on your radar.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.

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