Lumentum (LITE) PT Raised to $210 at BofA Securities
BofA Securities analyst Vivek Arya raised the price target on Lumentum (NASDAQ: LITE) to $210.00 (from $135.00) while maintaining a Neutral rating.
The analyst comments "LITE’s portfolio of core laser components, transceivers, and optical circuit switches (OCS) is optimally suited to address the massive surge in optical connectivity demand that is growing at a greater than 25% CAGR through CY24-29 inside a potential $30bn+ TAM. The convergence of these drivers is powering a 46%/+42% YoY sales inflection in CY25/26E per our updated model. Supply is beginning to ease which helps unlock a structural step-up in high-speed datacom lasers, which is agnostic to shifts in end customer transceiver share, along with transceivers, where revenue is accelerating into FY26 as volumes diversify beyond the anchor hyperscaler customer. OCS also has a clear path forming to $100mn/qtr revenue by C2H’26. Yet, even as we model the business hitting $750mn/qtr sales by CQ3’26 (from 1H’27 prior), we still acknowledge upside headroom from CPO lasers (mainly C2H’26) and transceivers which could ultimately scale to $250mn/qtr sales. Taken together with low-40% GMs, opex increase towards $140mn/qtr, we now see CY26 pf-EPS virtually at $7. We raise our CY26/27E pf-EPS by 16%/6% to $6.92/$8.27. Operating momentum is evidently behind LITE which is reflected in +124% share appreciation YTD; however, even assuming a multiple of 30x (high-end of a 9x-32x range) gets us to a $210 PO (old PO was $135 based on 23x CY26 PE), suggesting much potential upside is already factored in. Reiterate Neutral."