MKM Partners Reiterates Buy Rating on Lumentum (LITE)
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MKM Partners analyst Michael Genovese reiterated a Buy rating and $138.00 price target on Lumentum (NASDAQ: LITE).
The analyst comments "Take Advantage of the Pullback: We would take advantage of the pullback in LITE's share post its announcement of its intention to acquire COHR (Not Rated), a leading industrial-focused laser systems company, for $5.7bn equity value. The over (11%) pullback in LITE shares (vs. SPY +.78%) was partly driven in response to LITE's preliminary FY2Q21 operating results, with revenue of ~$479mn, which were essentially in-line with Street's consensus, but below our Street-high forecast of $500mn and PF EPS at the midpoint of $1.95, which were meaningfully above Street's consensus of $1.82 and slightly below our Street-high $1.98 previous respective forecast. We believe buy-side expectations were meaningfully above Street's consensus. Moreover, as we previously highlighted (see our note, "A Potential LITE+COHR = Impressive Diversification; But Still Lots of Questions," dated 1/19/21), the deal was also initially met with investor skepticism; however, we see the COHR acquisition driving significant revenue diversification in LITE's operating model, which eventually should convince investors that LITE is much more than an AAPL-supply-chain story."
Shares of Lumentum closed at $96.55 yesterday.
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