Lumentum jumps as Wall Street pleased with Q1 results, outlook
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Lumentum (NASDAQ:LITE) was in focus on Friday after the telecom equipment maker reported stronger-than-expected results and guidance, leading to praise from Wall Street.
Shares rose 12% in early trading.
Raymond James analyst Simon Leopold maintained his Outperform rating on Lumentum and said the company is benefiting from strength in its datacom optics business, as well as exposure to artificial intelligence, while the telecom and industrial laser units continue to recover slowly.
“Management continues to expect to return to a $500M quarterly run-rate exiting CY25, and we remain comfortable in this forecast and think Lumentum hits this milestone in September 2025,” Leopold wrote in a note to clients. “Lumentum had an operating margin of 20% and higher in 5 of the last 7 years, and can return to these levels with laser chips taking the place of iPhones.” He also upped his price target to $100 from $70.
Susquehanna analyst Christopher Rolland also upped his price target on Lumentum (to $115 from $80) as he said the guidance was the one “we had been waiting for.”
Additionally, the return of Google (GOOG) (GOOGL) as its primary CloudLight customer should help, with the potential for Amazon (AMZN) and others down the line.
“Cloud & Networking guidance came in better as cloud and AI applications continue to increase demand across the product portfolio, particularly 800G,” Rolland wrote. “For Telco, management called out increased demand helped by lasers into 400ZR modules, as well as growing demand for 130/200 gigabaud coherent components and integrated ROADMs (Ciena).”
Rolland continued: “For Datacom, LITE set a record for [datacom] laser chip orders, including substantial 200G [externally-modulated lasers] orders, reflecting strong demand from multiple customers. Management highlighted that its 100G [externally-modulated lasers] are currently shipping in high volume, with customers now designing 200G [externally-modulated lasers] for both 800G and 1.6T transceivers (ramping towards summer of next year). While we had hoped this would ramp earlier, this is perhaps understandable on Blackwell networking upgrades and 1.6T delays.”