Rosenblatt reiterates Buy rating on Lumentum amid FCC transceiver rules

Rosenblatt analyst Mike Genovese reiterated a Buy rating and $1,300.00 price target on Lumentum (NASDAQ: LITE), citing potential U.S. Federal Communications Commission restrictions on Chinese 3.2T optical transceivers.

According to the analyst, a sell-side firm reported that the FCC is likely to restrict Chinese 3.2T transceivers, potentially as soon as this month, based on meetings with strategists in Washington, D.C.

The proposed rules would apply to 3.2T transceivers, a market expected to begin in 2028 and ramp significantly in 2029. The restrictions would not affect the existing 1.6T market, where Chinese module makers Innolight and Eoptolink hold the top two share positions.

A reported exception would allow Chinese transceiver makers to sell 3.2T transceivers if they contain 65% or more U.S. content. Genovese noted this provision could benefit U.S. laser makers, particularly Lumentum, given its position as an indium phosphide laser vendor supplying Chinese transceiver manufacturers.

The analyst also noted potential moderate benefits for U.S. transceiver makers Coherent (NYSE: COHR) and Applied Optoelectronics (NASDAQ: AAOI), both of which Rosenblatt rates as Buy.

Lumentum shares closed at $1,085.42 prior to the announcement.

You May Also Be Interested In

• Goldman Sachs on Meta Platforms Inc. (META): 'We expect investors to have an initial positive reaction'
• N-able and SentinelOne expand cybersecurity partnership
• United Airlines (UAL) files mixed shelf