Intel stock extends gains after report of possible U.S. government stake
Investing.com - BofA Securities upgraded Lumentum (NASDAQ:LITE) from Underperform to Neutral and raised its price target to $135.00 from $78.00. The stock, which has surged 158.78% over the past year and is trading near its 52-week high of $120.30, appears overvalued according to InvestingPro analysis.
The upgrade follows Lumentum’s results indicating the company may reach its medium-term revenue run-rate of $600 million per quarter and longer-term goal of $750 million per quarter two to three quarters earlier than BofA previously modeled. The company maintains strong liquidity with a current ratio of 4.72, suggesting ample resources to support its growth targets.
BofA noted that under its relatively new CEO, Lumentum is refocusing on its best-of-breed optical component roots while prudently managing its lower margin optical transceiver mix, potentially leading to a faster path toward achieving or exceeding the target 40% gross margin.
The firm raised its fiscal year 2026 and 2027 pro-forma earnings estimates significantly to $4.86 and $6.92 from $3.87 and $4.88, respectively.
BofA’s price target increase is based on a 23x CY26E price-to-earnings multiple, up from 17x previously, which is in line with peers and still within Lumentum’s historical range of 9x to 32x, while noting the stock has already appreciated 42% year-to-date compared to the SOX index’s 17% gain.
In other recent news, Lumentum Holdings Inc. reported robust financial results for the fourth quarter of fiscal year 2025, with earnings per share reaching $0.88, surpassing the forecasted $0.80. The company also reported revenue of $480.7 million, exceeding the expected $467.31 million. Following these results, several analyst firms have adjusted their price targets for Lumentum. Stifel raised its price target to $132 from $100, citing strong demand in datacom components and record levels of EML shipments. Wolfe Research increased its price target to $150 from $120, highlighting the role of artificial intelligence in driving optical traffic growth. Raymond James also raised its price target to $145 from $125, noting the significant impact of Optical Circuit Switches in the company’s earnings. These developments reflect a positive outlook from analysts, with Stifel, Wolfe Research, and Raymond James maintaining their favorable ratings on Lumentum.
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