What happened
One of the tougher telecom stocks to own, Lumen Technologies (LUMN), couldn't make it over the rise of Hump Day. On Wednesday, the company's share price fell by more than 8%, on a steep price-target cut by an analyst. That was a notably worse performance than that of the S&P 500 index; it fell by a relatively light 0.5% on the day.
So what
Well before market open this morning, UBS (UBS -0.40%) prognosticator Batya Levi announced a 50% price target cut on Lumen's stock. The new level is $2.50, down from the preceding $5. Levi maintained a neutral recommendation on the company.
The reasons for the move were unclear. Interestingly, it comes mere days after very good Lumen news hit the headlines. The company announced the launch of a new product line, ExaSwitch, aimed at helping clients with bandwidth management across data centers (the facilities where banks of servers are stored).
Lumen didn't waste any time with ExaSwitch, as the product is already live in three operating hubs in this country. International expansion should occur in the near future.
Now what
Investors remain wary of Lumen, though. No matter the positive developments the telecom reports, hanging immediately over its head is deteriorating profitability and a heavy debt load. Actually, the word "heavy" might be an understatement -- in its most recently reported quarter, the company was carrying a whopping $19.7 billion in long-term debt. Interest payments alone on that pile are going to be considerable.
