Shares of Lumentum Holdings (NASDAQ: LITE) are positive in mid-day trading Wednesday (+1.5%) following an upgrade from Barclays to Overweight (from Equalweight) and set new price target of $67.00 (from $65.00).

Analyst Joseph Wolf anticipates "strong results" from LITE over the next 12 to 18 months, leveraging the company's position as the 3D sensing technology market share leader at Apple, with the first stage of the iPhone X roll-out complete. The analyst acknowledges his slow uptake on 3D sensing technology and now sees upside for investors, suggesting they take advantage of current prices in LITE.

In the note, the Barclays analyst details 'Megatrends' for technology investors to target heading into 2018, citing changes to the smartphone market as a potential road map for his clients. Among those trends is facial recognition and the underlying 3D sensing technology. The optical communications sector is positioned to "benefit significantly" from multiple opportunities associated with the technology including AR/VR, security systems and LiDar for autos.

While other companies, such as Finisar Corp. (NASDAQ: FNSR) and II-VI Inc. (NASDAQ: IIVI) will benefit from the 3D sensing market as well, LITE "should keep its leadership well in 2019" as it remains entrenched with Apple into the second half of 2018. The current $67 valuation is based on 15x calendar year 2018 earnings per share of $4.50.

The new price target represents 33% upside from Tuesday's close.

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