Morgan Stanley analyst Meta Marshall has increased the price target for Lumentum (LITE, Financial) from $70 to $76, maintaining an Equal Weight rating on the stock. This adjustment follows Lumentum's optimistic revision of its fourth-quarter guidance just before a key company presentation this week. The updated midpoint of the Q4 forecast exceeds the previous range by approximately 3% in revenue and 11% in net profit. Additionally, Lumentum indicated it could achieve $500 million in quarterly revenue one quarter sooner than previously expected. The analyst views the current valuation as "reasonable," considering the industry competition and the expectations already reflected in the stock price.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 15 analysts, the average target price for Lumentum Holdings Inc (LITE, Financial) is $86.27 with a high estimate of $110.00 and a low estimate of $70.00. The average target implies an upside of 11.10% from the current price of $77.65. More detailed estimate data can be found on the Lumentum Holdings Inc (LITE) Forecast page.
Based on the consensus recommendation from 17 brokerage firms, Lumentum Holdings Inc's (LITE, Financial) average brokerage recommendation is currently 2.1, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Lumentum Holdings Inc (LITE, Financial) in one year is $70.79, suggesting a downside of 8.83% from the current price of $77.65. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Lumentum Holdings Inc (LITE) Summary page.
LITE Key Business Developments
Release Date: May 06, 2025
- Revenue: $425.2 million, above the high end of guidance.
- Non-GAAP EPS: $0.57, exceeding guidance expectations.
- GAAP Gross Margin: 28.8%.
- Non-GAAP Gross Margin: 35.2%, up 290 basis points sequentially.
- Non-GAAP Operating Margin: 10.8%, up 290 basis points sequentially.
- Non-GAAP Operating Profit: $46.1 million.
- Adjusted EBITDA: $71 million.
- Cloud and Networking Segment Revenue: $365.2 million, up 8% sequentially and 16% year-on-year.
- Industrial Tech Segment Revenue: $60 million, down 5% sequentially, up 14% year-on-year.
- CapEx Investment: $59.5 million, primarily for expanding clean room capacity and indium phosphide wafer production.
- Cash and Short-term Investments: Decreased by $30 million to $867 million.
- Q4 Revenue Guidance: $440 million to $470 million.
- Q4 Non-GAAP Operating Margin Guidance: 13% to 14%.
- Q4 Non-GAAP EPS Guidance: $0.70 to $0.80 per share.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Lumentum Holdings Inc (LITE, Financial) exceeded the high end of their guidance for both revenue and EPS in Q3, driven by strong demand from cloud customers.
- Revenue in the Cloud and Networking segment grew 8% sequentially and 16% year-over-year, fueled by robust demand from hyperscale cloud customers.
- The company set a record for EML chip shipments and remains on track to more than double this business by the end of calendar 2025.
- Lumentum Holdings Inc (LITE) is ramping production in CW lasers for silicon photonics transceiver applications, with expectations of increased shipments.
- The company introduced the R300 optical circuit switch, which is expected to improve scalability and efficiency in AI clusters and intra data center networks.
Negative Points
- Industrial Tech segment revenue decreased 5% sequentially, reflecting ongoing macroeconomic headwinds impacting industrial laser demand.
- The company faces a 100 basis point reduction in overall gross margin due to higher material costs and tariffs on shipments to U.S. destinations.
- Despite ramping capacity, Lumentum Holdings Inc (LITE) is unable to satisfy demand for narrow line width lasers for the balance of the calendar year.
- There is ongoing macroeconomic volatility, including tariff dynamics and export controls, presenting near-term challenges.
- The company is experiencing supply constraints in telecom products, which are expected to persist for the next several quarters.
