Lumen Technologies will report results this Tuesday after the bell, and the market is not approaching the number with a clean slate. The telecommunications infrastructure company has missed Wall Street’s revenue estimates multiple times over the last two years, even as its shares have climbed 40.4% over the last month.
The company’s last quarter showed why investors are still watching closely. Lumen reported revenue of $3.04 billion, down 8.7% from a year earlier, but beat analysts’ earnings-per-share estimates. That combination — a revenue shortfall in the broader history, but a better-than-expected profit line last time — has left the upcoming report as a test of whether the recent rally has been built on firmer ground or just a repricing of hope.
Analysts expect revenue to fall 11% year on year in the quarter Lumen is about to report, compared with a 3.3% decline in the same quarter last year. Over the last 30 days, the majority of analysts covering the company have reconfirmed their estimates, suggesting little change in the Street’s view despite the stock run-up. Lumen’s average analyst price target is $7.68, still below its current share price of $9.31.
The backdrop is mixed across the telecom services group. Iridium was the only peer in the segment to have reported results so far, and it missed analysts’ revenue estimates even though sales rose 1.9% from a year earlier. Iridium’s stock fell 3.6% on the results, while share prices in the telecommunication services segment were up 10.1% on average over the last month.
That gap leaves Lumen in a more demanding position than the sector average. Investors have already pushed the stock well ahead of analyst targets, but the company still has to show it can turn a pattern of revenue misses into something more durable. Tuesday’s report will not settle that question by itself, but it will say whether the recent enthusiasm can survive another hard look at sales.