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On Wednesday, Rosenblatt analysts increased the price target for Lumentum stock (NASDAQ: LITE) to $105 from $94, maintaining a Buy rating. Currently trading at $77.65, the stock sits within a broader analyst target range of $70-$110. This adjustment reflects improved gross margins in the company’s 800G transceiver segment, attributed to vertical integration and the introduction of new products.
The analysts noted a positive outlook for Lumentum’s financial performance, raising their earnings per share estimates for fiscal years 2025 and 2026 to $1.98 and $4.18, respectively, up from previous projections of $1.91 and $3.76. According to InvestingPro data, 15 analysts have revised their earnings upwards for the upcoming period. The revised price target is based on a 25x multiple for fiscal year 2026, a standard applied by the firm to companies with significant exposure to artificial intelligence markets.
Lumentum’s advancements in its product mix and operational efficiencies are seen as key drivers for the anticipated margin improvements. With a strong current ratio of 4.72 and projected revenue growth of 19% for fiscal year 2025, the company’s strategic focus on integrating its supply chain and expanding its product offerings is expected to enhance profitability.
The updated price target and earnings forecasts underscore the analysts’ confidence in Lumentum’s growth potential within the tech industry, particularly in areas related to AI and high-speed networking solutions. For deeper insights into Lumentum’s financial health and growth prospects, access the comprehensive Pro Research Report available on InvestingPro.
In other recent news, Lumentum Holdings Inc (NASDAQ:LITE). reported its third-quarter 2025 earnings, surpassing Wall Street expectations with earnings per share (EPS) of $0.57, against a forecast of $0.50, and revenue of $425.2 million, exceeding the anticipated $418.15 million. The company attributed its strong performance to robust demand in its Cloud and Networking segment, which grew 8% sequentially and 16% year-over-year. Lumentum also provided optimistic guidance for the next quarter, expecting revenue between $440 million and $470 million, with an EPS range of $0.70 to $0.80.
Analyst firms have adjusted their price targets for Lumentum following these developments. Raymond (NSE:RYMD) James raised its price target to $90, maintaining a Strong Buy rating, citing the company’s strong market position and potential growth opportunities due to hyperscalers moving away from Chinese manufacturers. Morgan Stanley (NYSE:MS) increased its price target to $76, keeping an Equalweight rating, noting the company’s positive revision of its fiscal fourth-quarter expectations. Stifel maintained a Buy rating with an $85 price target, emphasizing Lumentum’s robust third-quarter results and positive outlook for cloud-based transceiver revenue.
Meanwhile, Needham adjusted its price target to $100 from $110, maintaining a Buy rating, following Lumentum’s third-quarter performance, which surpassed consensus estimates. The company expects continued momentum in the fourth quarter, driven by a surge in 800G Datacom modules. Despite challenges such as tariffs and cost pressures, Lumentum anticipates improvements in gross margins and continues to expand its production capacity, particularly in Thailand. These recent developments underscore Lumentum’s strategic focus and resilience in the competitive optical components market.
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