UBS maintains neutral rating on Lumentum stock, target at $78

On Wednesday, UBS analysts reaffirmed their Neutral rating for Lumentum (NASDAQ: LITE) stock, maintaining a price target of $78. The stock, currently trading at $83.21 with a market capitalization of $5.7 billion, has seen 15 analysts revise their earnings estimates upward for the upcoming period, according to InvestingPro data. This decision follows Lumentum’s recent update in its 8-K filing regarding its Q4 FY25 guidance.

Lumentum has adjusted its revenue guidance for Q4 FY25, now expecting revenues between $465 million and $475 million. This represents an increase from the previous range of $440 million to $470 million. The mid-point of the new guidance reflects a 3% increase compared to the prior forecast. The company’s revenue growth forecast stands at 19% for FY2025, with analyst targets ranging from $70 to $110 per share.

The company also noted in the filing that it anticipates reaching its $500 million revenue target one quarter earlier than previously expected, now aiming for Q1 FY26.

UBS analysts highlighted that while the mid-point revision is 2% above their estimate of $463 million, the market may have already anticipated the revenue upside due to strength in datacom and optical transceivers.

Lumentum’s updated guidance and the UBS analysis provide insights into the company’s financial outlook as it approaches the end of fiscal year 2025. The company maintains strong liquidity with a current ratio of 4.72. For deeper insights into Lumentum’s financial health and growth prospects, including additional ProTips and comprehensive analysis, visit InvestingPro.

In other recent news, Lumentum Holdings Inc (NASDAQ:LITE). has made significant strides with its financial performance and strategic outlook. The company reported robust fiscal third-quarter results, exceeding both revenue and adjusted earnings per share (EPS) expectations. Stifel analysts noted that revenue and EPS surpassed the upper limits of the company’s guidance, driven by strong demand from cloud-related markets and a gradual recovery in networking and telecom sectors. This positive momentum has led to an optimistic outlook for the company’s cloud-based transceiver revenue, which is anticipated to grow by over 50% sequentially.

In addition, several analyst firms have updated their price targets for Lumentum. Rosenblatt raised its target to $105, citing improved gross margins due to vertical integration and new product introductions. Raymond (NSE:RYMD) James increased its target to $90, following a positive preannouncement and discussions with management, while Morgan Stanley (NYSE:MS) adjusted its target to $76, reflecting a revision of fiscal fourth-quarter expectations. Needham, however, lowered its price target to $100, attributing the change to a broader compression of multiples in the tech sector despite Lumentum’s strong third-quarter performance.

Lumentum’s management has also provided guidance for the fiscal fourth quarter, expecting revenue to slightly exceed consensus estimates and projecting approximately 30% quarter-over-quarter EPS growth. The company aims to surpass a $500 million quarterly revenue run-rate by the end of calendar year 2025, supported by increasing production capacity and sustained demand. Analysts have highlighted Lumentum’s growth potential, particularly in AI and high-speed networking solutions, and the company’s strategic focus on expanding its product offerings and integrating its supply chain.

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