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On Thursday, Stifel analysts maintained a Buy rating for Lumentum (NASDAQ:LITE) with a steady price target of $105.00. Currently trading at $66.82, the stock sits well below analysts’ targets, which range from $70 to $125. According to InvestingPro data, 13 analysts have recently revised their earnings estimates upward for the upcoming period. The firm’s analysts commented on the recent developments in the ongoing Dragon Train litigation after Lumentum’s management held a call post-market close. The call provided an update on three additional complaints in Aristocrat’s second amended complaint, filed on March 14, 2025.
During the update, Lumentum disclosed that a third-party audit of games produced since Emma Charles’ hiring has not found any instances of ’contagion.’ In addition, separate complaints against Lumentum’s Jewel of the Dragon game revealed another instance of misappropriated trade secrets dating back to 2015.
The management’s commentary suggested that there might be an immaterial incremental financial impact from these developments. While uncertainty remains regarding potential contagion and financial penalties, InvestingPro data shows the company maintains strong liquidity with a current ratio of 4.76, indicating liquid assets well exceed short-term obligations.
Despite these challenges, Stifel analysts expressed a cautious stance due to the high direct and indirect tariff risks associated with the company, along with the uncertainty surrounding the Dragon Train litigation and challenging comparisons. Nonetheless, they see a positive setup leading into Lumentum’s Investor Day on May 20, 2025. While reiterating the Hold rating, the analysts adjusted the target price to $93, factoring in the macroeconomic risks. Though currently unprofitable, InvestingPro analysis indicates the company is expected to return to profitability this year. For deeper insights into Lumentum’s financial health and growth prospects, access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
In other recent news, Lumentum Holdings Inc . reported fiscal second-quarter earnings that exceeded expectations, with adjusted earnings per share reaching $0.42 against an analyst estimate of $0.35. The company also reported revenue of $402.2 million, surpassing the forecasted $388.86 million and marking a 9.7% year-over-year increase. Despite these positive results, investor sentiment appeared lukewarm, as the earnings beat did not meet heightened expectations following recent stock gains. Looking forward, Lumentum anticipates third-quarter revenue between $410 million and $425 million, with adjusted EPS projected between $0.47 and $0.53, both slightly above analyst expectations.
In other developments, Lumentum has introduced new L-band modules for fiber networks, aiming to enhance fiber capacity in data centers and metro applications. These modules are designed to address the growing demand for data transmission capacity driven by AI and cloud applications. Furthermore, Lumentum has been selected as a key partner in NVIDIA (NASDAQ:NVDA)’s silicon photonics project, contributing its high-power lasers to NVIDIA’s Spectrum-X networking switches. This collaboration aims to reduce power consumption in AI infrastructure.
Analysts at Jefferies have maintained a Buy rating on Lumentum, though they have adjusted the price target from $100 to $90. The firm highlighted Lumentum’s potential in the electro-absorption modulated laser market, which is experiencing high demand. Jefferies noted the company’s strategic positioning to capitalize on market shifts toward higher-speed solutions.
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