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Lumen (LUMN) Wins Deal From the US GAO to Boost Connectivity

Lumen Technologies LUMN has secured a $73.6 million contract from the U.S. Government Accountability Office (“GAO”) to boost its network, data, voice and video connectivity.

The company delivers managed and virtual private network services, along with ethernet transport, Internet protocol, videoconferencing, and voice and toll-free solutions to the U.S. GAO.

Lumen will be aiding the U.S. GAO in its efforts to transform into a contractor-owned and contractor-operated network model. This will help boost the government body’s operational efficiency as well as reduce capital expenditures and enhance service delivery.

LUMN highlighted that this task order has a base performance period of one year. The contract, awarded under the General Services Administration's Enterprise Infrastructure Solutions (EIS) program, has eight additional one-year options.

Lumen Technologies, Inc. Price and Consensus

Lumen Technologies, Inc. Price and Consensus
Lumen Technologies, Inc. Price and Consensus

Lumen Technologies, Inc. price-consensus-chart | Lumen Technologies, Inc. Quote


Lumen’s earlier contract wins under the EIS program include a $1.2 billion deal with the U.S. Department of Agriculture (“USDA”) in 2022. Under the terms of the deal, LUMN was to deliver an integrated wide-area data transport service (with remote access and contact center and cloud connectivity offerings) to more than 9,500 USDA locations both domestically and globally.

Based in Monroe, LA, Lumen is an international facilities-based technology and communications company that operates one of the most interconnected networks globally.

LUMN’s performance is gaining from continued momentum in cloud and colocation, along with heavy investment in the Quantum fiber and enterprise business. The company added 20,000 Quantum fiber subscribers, taking the count to 916,000 at the end of the fourth quarter.

The company is simplifying operations and as part of that, it recently completed the sale of its EMEA business and certain CDN contracts.

Its highly leveraged balance sheet is a concern. LUMN recently announced that it has completed the transactions as contemplated in the earlier amended and restated transaction support agreement entered with certain creditors of the company. As a result, total maturities outstanding for 2025 to 2026 have reduced to $600 million from $2.1 billion earlier. Total maturities outstanding for 2027 are now $800 million compared with $9.5 billion earlier.

LUMN now has a strong liquidity position, which includes the closing of a new $1 billion revolving credit facility (maturing in June 2028) and completion of the private placement of $1.325 billion principal amount of senior secured notes (maturing in November 2029).

With the completion of this debt deal and strengthened liquidity, the company is now focusing on the execution of business transformation.

Lumen carries a Zacks Rank #3 (Hold) at present.

Stocks to Consider

Some better-ranked stocks worth consideration in the broader technology space are Synopsys SNPS, Iridium Communications IRDM and Pegasystems PEGA. While SNPS and IRDM sport a Zacks Rank #1 (Strong Buy) each, PEGA carries a Zacks Rank of 2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for SNPS’ fiscal 2024 earnings per share (EPS) is pegged at $13.28. The long-term earnings growth rate is 17.5%. Synopsys’ earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 4.1%. Shares of SNPS have soared 47.3% in the past year.

The Zacks Consensus Estimate for IRDM’s 2024 EPS has increased 213% in the past 60 days to 72 cents. Iridium’s earnings beat the Zacks Consensus Estimate in two of the last four quarters and missed twice. The average earnings surprise is 91.7%.

The Zacks Consensus Estimate for PEGA’s 2024 EPS has increased 19.4% in the past 60 days to $2.77. Pegasystems’ earnings beat the Zacks Consensus Estimate in two of the last four quarters and missed twice. The average earnings surprise is 1,063.8%. Shares of PEGA have gained 34.2% in the past year.

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