Jefferies: Coherent, Lumentum to benefit from AI-Driven transceiver growth

Investing.com -- Jefferies assumed coverage of Coherent (NYSE: COHR) Corp and Lumentum Holdings (NASDAQ: LITE) with "Buy" ratings, citing strong growth prospects in the data center transceiver market as AI adoption drives higher interconnect speeds.

Jefferies sees transceiver demand accelerating, with AI server growth pushing unit sales and pricing higher. It forecasts a 29% compound annual growth rate (CAGR) for 100G+ transceivers through 2027, outpacing AI accelerator growth at 22%.

The firm downplayed fears of rapid displacement by co-packaged optics (CPO), expecting alternative packaging to first impact back-end networks while transceivers remain dominant through the decade.

Jefferies set a $110 price target for COHR, noting its strength in 400G transceivers and potential profitability improvements under CEO Jim Anderson. For LITE, with a $100 price target, the transition to 200G external modulated lasers (EMLs) presents a key growth driver as AI networks scale.

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