Lumentum (LITE.US) Stock Price Surges After Results Wall Street Analysts Suggest “Continuing to Stand in the Light”
The Zhitong Finance App learned that the stock price of optical communications giant Lumentum (LITE.US) surged 14% on Wednesday. Previously, the company announced better-than-expected results and guidelines for the fourth fiscal quarter of fiscal year 2026, and received generally positive feedback from analysts.
Morgan Stanley raised Lumentum's target price from $900 to $1,000, while maintaining a “wait and see” rating.
A team of analysts led by Meta Marshall said that Lumentum's fourth fiscal quarter performance was basically in line with expectations, and gross margin hit the high end of investors' expectations. With product pricing and portfolio optimization and the gradual expansion of new businesses, the outlook for the future continues to improve.
Marshall said Lumentum's next key catalyst is more formal contract execution and a brighter future for the scale and profit margin of the near-encapsulated optics (NPO) business. The company's management revealed that the relevant official announcement may have to wait several quarters, so the market reaction after the financial report was released was rather lackluster.
The Marshall team added, “We are optimistic in the short term because there is limited room for downside, especially in the context where the US Federal Communications Commission (FCC) may introduce new regulations. However, a clear catalyst for stock prices may have to wait until the fall of this year or even around the OFC (Optical Communications Conference) next year, when the new NPO order situation will become more clear. ”
Needham, on the other hand, maintained Lumentum's “buy” rating, with a target price of $1,040.
Analyst Ryan Koontz's team said, “Lumentum achieved strong results in the fourth fiscal quarter. Revenue and earnings per share were 2% and $0.26 higher than market consensus, respectively, while the guidance for the next fiscal quarter was 8% and $0.51 higher than expected, reflecting the continued bias in the AI capital expenditure structure towards the optical communications sector.”
Koontz said, “We expect Lumentum to continue to dominate the high-performance optical devices required for AI infrastructure as the company expands into new multi-billion dollar optical circuit switching (OCS) and co-package/near-package optical (CPO/NPO) lasers. We have drastically raised our earnings forecast for FY2027 and for the first time estimated earnings per share for FY2028 of approximately $35. Lumentum has been our go-to stock for 19 consecutive months.”
According to financial reports, Lumentum's fourth fiscal quarter revenue increased 109.3% year over year to US$1,006 million, better than analysts' average expectations of US$990 million. Adjusted net profit was US$326 million, up 415% year on year; adjusted earnings per share was $3.23, better than analysts' average forecast of $2.97; adjusted gross margin was 50.4%, up 1,260 basis points year over year, better than analysts' average expectation of 48.8%; adjusted operating margin was 36.6%, up 2,160 basis points year over year.
As the demand for high-speed optical interconnection in AI clusters explodes, Lumentum has become one of the key beneficiaries in this round of AI hardware market. The company's stock price has risen 153% since this year.
According to Tipranks data, overall, Wall Street analysts are still optimistic about Lumentum. The consensus rating is “Strong Buy”. The average target price is $1099.38, which is 18% higher than the latest closing price.
