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Lumen stock falls after missing on Q3 earnings estimates

Yahoo Finance Live anchors discuss quarterly earnings for Lumen.

Video Transcript

[AUDIO LOGO]

RACHELLE AKUFFO: Let's start with my pick, Lumen Technologies, ticker LUMN. The communications security and cloud services company is selling off to the tune of up more than 16% there after a Q3 earnings miss. Now, more pressure on the stock came today after announcing it's eliminating dividends. Lumen looking to reallocate that capital to fund growth and bolster its balance sheet.

Now, the stock had already taken a beating year-to-date. Down more than 50% now, as that dividend cut was expected. Plus in recent months, Lumen closed its two asset sales and appointed a new president and CEO Kate Johnson, who will start in those roles on Monday. Now, investors are unsure if these latest moves signal a turnaround story waiting to happen or a demise, as Lumen tries to get its financial house in order.

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Now, longer term divesting noncore business to fuel sustainable growth is a plus. But inflationary pressures and high operating costs still a concern in the shorter term, Seana.

SEANA SMITH: Yeah, Rachelle, we saw some reaction on the Street. The price target cut at UBS to $7.00 from $11. JPMorgan also lowering their price target, as a result of the earnings and what we're just getting from this company. Cowen out, though, actually taking a more optimistic tone when it comes to these latest changes. They are saying, that the dividend cut here was, quote, "long-awaited." And they're also saying it can turbocharge its growth initiative.

So again, the stock to a huge hit today. But maybe, it's more of a valuation call from some of these analysts at this point.