Buy this stock ahead of Q2 earnings: Mizuho

Investing.com -- Mizuho highlighted an optical components maker in a note Tuesday, telling investors it would be a buyer of the company ahead of its fiscal fourth-quarter results on Aug. 11.

Mizuho reiterated an Outperform rating and $1,100 price target on Lumentum Holdings, with analyst Vijay Rakesh saying the firm continues to see upside, pointing to strong indium phosphide, or InP, demand with room for the September quarter to beat, ramps in key laser and optical products, and industry leadership across a total addressable market of more than $90 billion.

Mizuho reiterated June-quarter revenue and earnings estimates of $986 million and $2.95, with revenue up 23% quarter over quarter, and models the September quarter at $1.13 billion.

The firm said the outlook from key InP suppliers "could imply potential upside to LITE's SepQ estimates," noting AXT, Landmark and Sumitomo Electric all saw strong near-term performance and capacity ramps.

Mizuho remains optimistic on Lumentum's role in what it called "the Photonic AI DC Transformation," with EML leadership, optical circuit switches growing to a more than $10 billion long-term TAM with a key customer ramping at Google, and co-packaged optics demand. It sees a line of sight to gross margins above 50%.

Rakesh noted Lumentum is up roughly four times since November 2025 but down about 27% from its peak, versus a smaller decline in the SOX index, adding that he would buy into earnings "with strong 2H26E momentum." The $1,100 target represents 33 times fiscal 2028 estimated earnings, implying an attractive 0.4 times PEG.

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