CenturyLink (CTL) Stock Plummets Over 3% in 2023 Following Morgan Stanley Downgrade and Price Target Cut to $14.80
CenturyLink shares experienced a sharp decline after Morgan Stanley downgraded the stock and lowered its price target, signaling caution amid rising wireless competition and regulatory challenges.
CenturyLink, Inc. (CTL) shares dropped more than 3% during Tuesday’s trading session after Morgan Stanley downgraded the stock from Overweight to Equal Weight, reducing its price target from $16.00 to $14.80 per share. Despite the cut, the new target still implies a 13% upside from Tuesday’s closing price. This downgrade follows Evercore ISI’s recent Underperform rating initiation, contributing to a breakdown below key support levels this week.
Analyst Simon Flannery expressed increased caution toward the telecom services sector due to intensifying wireless competition, regulatory uncertainties, and high leverage amid ongoing secular headwinds. While CenturyLink’s valuation remains attractive on certain metrics, Flannery anticipates only partial transformational gains by the end of 2023, as revenue continues to decline and the dividend yield spread against AT&T Inc. (T) tightens following recent outperformance.
Technically, CTL stock has broken below its trendline support and the 50-day moving average near $13.45. The Relative Strength Index (RSI) has dipped close to oversold territory at 33.56, while the Moving Average Convergence Divergence (MACD) indicates a strong bearish momentum. These signals suggest potential short-term consolidation; however, the medium and long-term outlook remains bearish.
Investors should monitor for price stabilization below the $13.45 resistance level before a possible decline toward the 200-day moving average around $11.70 or trendline support near $11.00 over the coming months. Should the stock manage to rebound above these critical levels, a retest of the $15.00 highs could occur, although prevailing bearish sentiment makes this less probable.
Note: The author holds no position in CenturyLink stock outside of passive index funds.
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